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How to buttress Switzerland against banking failure

Protesters lift a boat with the title Crisis Suisse
Lawmakers and regulators must work out how to avoid another financial crisis. KEYSTONE/© KEYSTONE / MICHAEL BUHOLZER

The forced sale of Credit Suisse to its banking rival UBS has created a headache for Switzerland.

The emergency takeover exposed the failure of regulations to prevent an uncontrolled collapse of a major Swiss bank. It also created a monopolistic giant bank with a balance sheet twice the size of the Swiss economy.

SWI swissinfo.ch asked three experts how Switzerland can create a regulatory safety net to shield the country from future problems.

The government and parliament are under pressure to deliver regulatory reforms that will ensure greater stability for the financial system.

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But Rudolf Minsch, chief economist of the Swiss Business Federation economiesuisse, warns lawmakers to resist the temptation to create new regulations to micro-manage banks or restrict other financial actors, such as insurance companies.

Centre Party politician Peter Hegglin is of the opinion that Switzerland’s biggest banks must be tamed to prevent a potential catastrophe for the rest of the economy.

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Unstable financial system creates more harm than good

This content was published on Switzerland’s biggest banks need to be tamed with more potent regulation to prevent a potential catastrophic impact on the economy, says Centre Party parliamentarian Peter Hegglin.

Read more: Unstable financial system creates more harm than good

Switzerland has too small of an economy to cope with the collapse of a large bank, Hegglin argues.

Adriel Jost, a fellow at the Institute for Swiss Economic Policy, calls on banks to shoulder responsibility by changing the way they go about their business.

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The current trend of treating banks as if they are companies in any other sector fails to appreciate the unique complexities of the financial system, Jost says.

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SWI swissinfo.ch - a branch of Swiss Broadcasting Corporation SRG SSR