Chairman of the Swiss National Bank Thomas Jordan stated on Wednesday that averting a global financial catastrophe was made possible by the central bank’s actions following Credit Suisse’s collapse.
After significant client withdrawals and a collapse in investor and shareholder trust, the SNB provided a substantial lifeline to the struggling lender. SNB provided emergency liquidity as part of this in the amount of 168 billion Swiss francs ($185 billion).
Credit Suisse’s emergency sale to domestic rival UBS in March for a discounted price of just 3 billion Swiss francs was facilitated by the central bank, regulator FINMA, and the Swiss authorities thanks to the time this bought.
According to Reuters, Jordan stated at a conference in Bern, Switzerland, on Wednesday, “The SNB’s willingness and ability to provide liquidity was crucial in managing the acute crisis at Credit Suisse and thus in avoiding a financial crisis with serious economic consequences for Switzerland and the rest of the world.”
August saw UBS declare that, upon conclusion of the takeover, it had terminated Credit Suisse’s government and central bank protections, including an emergency liquidity assistance plus (ELA+) loan of fifty billion Swiss francs gained from the SNB.
Jordan said that without the ELA+ loan, which was not secured as the SNB usually needed, Credit Suisse ran the risk of not being able to pay its debts, endangering the stability of the system.
Jordan’s remarks were consistent with those made by Urban Angehrn, CEO of FINMA, who said in April that permitting Credit Suisse to file for bankruptcy would have severely damaged the Swiss economy and probably led to bank runoffs.