BIS chief lauds Swiss handling of Credit Suisse crisis

Agustin Carstens, the head of the Basel-based Bank for International Settlements (BIS). Keystone / Eduardo Verdugo

Agustin Carstens, the head of the Bank for International Settlements (BIS) believes the Swiss authorities did a good job in rescuing Credit Suisse.

In an interview published in the Tamedia papers on Sunday, Carstens assessed the Swiss authorities’ handling of the problems surrounding Credit Suisse. 

“Considering the crisis, they did a very good job,” he said.

+Where did it all go wrong for Credit Suisse?

According to the BIS head, the demise of Credit Suisse had little negative impact on the Swiss economy or on the global financial system.

“The bank was systemically important. If you don’t act there, other banks will also get into trouble, and then the problem will increase dramatically,” he added.

Carstens said it was crucial to “put out the fire immediately” and likened the government’s intervention to firefighting. 

Understanding the collapse

The BIS chief was against a knee-jerk roll out of new regulations, such as high capital ratios, in a hasty manner. According to him, the main problem of failed banks is their business model and the responsibility for the collapse lies with the owners and the management.

 “We first need to understand exactly what happened,” he said. The Basel Committee on Banking Supervision is working on this and Carstens said a recommendation will be published in a few months.

According to Carstens, any revised regulation should include the digitalisation of financial service providers. He also suggested looking at the different ways to strengthen liquidity in the banking system, such as higher liquidity buffers.