Financial Crime World

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Switzerland’s Banking Sector: A Model of Regulation

Switzerland’s banking sector is renowned for its strict regulatory regime, designed to protect customers and maintain stability. The country’s financial center has an effective system of preventive and curative measures to limit risks and prevent damage.

Primary Goal of Banking Regulation

The primary goal of banking regulation in Switzerland is to safeguard individual bank customers, particularly creditors, and maintain the stability of the overall banking and financial system. This is achieved through a range of legal instruments, including:

  • Federal legislation
  • Federal Council ordinances
  • FINMA ordinances and circulars
  • Self-regulatory directives from the Swiss Bankers Association

Regulatory Bodies

The regulatory landscape in Switzerland is overseen by two key bodies:

  • FINMA (Swiss Financial Market Supervisory Authority): responsible for overseeing individual institutions
  • SNB (Swiss National Bank): has powers to regulate the system as a whole, including proposing activating the countercyclical capital buffer and implementing measures such as the “too big to fail” regime for systemically important financial institutions

Response to the 2007-2008 Financial Crisis

In response to the global financial crisis, many areas of banking regulation in Switzerland have been tightened up and improved. For example:

  • Implementation of Basel III international standards on capital adequacy and liquidity
  • Ongoing work to implement remaining elements of the Basel reform package

Swiss Bankers Association’s Involvement

The Swiss Bankers Association plays a crucial role in this process, ensuring that reforms are:

  • Credible
  • Proportionate
  • Take into account economic effects

The association monitors developments globally and nationally and is committed to maintaining a credible and competitive regulatory environment for Switzerland’s financial center.

Expert Opinion

Experts agree that Switzerland’s banking sector has an effective regime of preventive and curative measures, making it one of the best regulated in the world. For further information, visit the websites of:

  • Basel Committee on Banking Supervision
  • Swiss National Bank
  • FINMA