LAUSANNE. Switzerland's financial regulator will gain authority to approve, reject and order changes to banks' emergency liquidity plans under a package of measures completing its legislative passage, a direct response to the seventy-two hours in March 2023 when the country's second-largest bank survived only on state-engineered life support.
The revision empowers FINMA to require banks to demonstrate, at least annually and under stress scenarios the regulator itself specifies, that they can mobilise sufficient liquidity within defined timeframes. Banks whose plans fall short can be ordered to restructure funding, pre-position collateral at the central bank, or hold additional liquid assets beyond the standard requirements.
The legal shift is from disclosure to verification. Until now, emergency liquidity planning sat within banks' internal risk management, reviewed by supervisors as part of general prudential dialogue but not subject to formal approval. The new framework makes the plan a licensable document: operating with an unapproved plan becomes a breach of banking law carrying sanctions up to licence conditions.
The impetus came from the post-mortems of the Credit Suisse collapse. The parliamentary investigation concluded that the bank drew 168 billion francs in emergency central bank assistance across its final days, that its collateral positioning was improvised under extreme time pressure, and that supervisors lacked a clean legal basis to compel better preparation earlier. The Federal Council's reform programme, of which these powers form the liquidity pillar, follows that report's recommendations.
Practically, the change lands hardest on the mid-tier. The two globally systemic banks already maintain extensive collateral frameworks with the Swiss National Bank. The cantonal banks, regional lenders and the roughly ninety smaller institutions must now document how they would convert loan books and securities into central bank-eligible collateral within days, an exercise many have never run end to end.
The banking association supports the intent while contesting details. It warns that an overly prescriptive collateral pre-positioning requirement would immobilise assets and tighten credit to small businesses, and it has secured a proportionality clause under which banks below defined thresholds may file simplified plans. Industry estimates put one-time implementation costs across the sector in the low hundreds of millions of francs. Cantonal banks, which hold roughly a fifth of domestic deposits, say they will pool part of the documentation work through their joint IT providers.
A partner in the regulatory practice of a Zurich law firm said: “Clients are discovering that a liquidity plan is now something a supervisor can fail, like an exam, rather than something a supervisor reads, like a brochure.” Retainer work on plan remediation, she noted, has tripled in a year.
Some economists argue the measures do not address the deeper problem revealed in 2023: the speed of digital bank runs, in which tens of billions can leave in hours. A professor of banking law at the University of St. Gallen observes that no feasible collateral plan survives a true wholesale run, and that the reform's real function is to buy the authorities time for an orderly resolution rather than to prevent crises. On that reading, the honest measure of success will be a weekend that ends without panic, not one that never begins.
FINMA, for its part, has been candid that the powers arrive with expectations attached. The regulator's leadership has told parliamentary committees it intends to conduct full-scope liquidity plan reviews at the largest banks within the first year, and to publish aggregate findings, a transparency commitment the industry accepted with visible reluctance.
The provisions enter into force in stages: the approval duty applies to systemic banks from the start of 2027 and to all other institutions twelve months later. Banks must submit their first plans under the new standard within nine months of the implementing ordinance, which the State Secretariat for International Finance is drafting now.
In the longer view, the package continues a decade-long reconstruction of Swiss crisis law. Each episode since 2008 has transferred a further slice of risk management from bank discretion to regulatory command, and the liquidity plan, once an internal document, is the latest to make that journey.