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Investing.com -- Swiss lawmakers have decided to postpone the implementation of a permanent public liquidity backstop (PLB) for large banks. The safety net is now tied to a forthcoming government proposal on capital requirements for lenders such as UBS. The decision, made unanimously by an upper house committee, awaits confirmation in the upcoming spring session of parliament.
This move may push back the introduction of Switzerland’s permanent PLB until after 2026. A PLB is a financial safeguard that provides cash to lenders facing serious financial difficulties. In 2023, for instance, Credit Suisse tapped into a PLB through an emergency law before the bank collapsed and was subsequently acquired by UBS.
The specific structure of the permanent PLB will be determined in the broader context of Switzerland’s regulations for banks that are too large to fail. This conclusion was reached by lawmakers after consultations with the authors of a recent study from Bern University and other academic experts.
The committee has expressed its support for the PLB in principle. However, it believes that in-depth discussions should be put on hold until the Swiss government has clarified its approach to regulating systemically important banks. This was announced in a press release on Tuesday.
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