The events surrounding Credit Suisse are to remain an isolated case. As a matter of principle, the Swiss National Bank (SNB) does not want to grant emergency liquidity to financial institutions without collateral.
The extraordinary liquidity assistance granted to Credit Suisse during the crisis should not become a regular monetary policy instrument of the SNB, SNB President Thomas Jordan said at an event on Wednesday.
Credit Suisse had prepared too little collateral for deposit with the SNB to receive extraordinary liquidity assistance on a massive scale, Jordan noted in his opening speech at the conference "The SNB and its Watchers" in Bern. However, the case of CS had also shown in an exemplary manner that customer deposits could now flow out much faster and more extensively than had been assumed in the previous regulation.
In March, the SNB provided CS with ELA+ liquidity assistance ("Emergency Liquidity Assistance") based on an emergency decree issued by the Federal Council. CS did not have to deposit any collateral for these loans; only an SNB bankruptcy privilege applied. It supplemented the traditional liquidity assistance (ELA) and the loans guaranteed by the federal government (Public Liquidity Backstop PLB). At its peak, the SNB provided Credit Suisse with 168 billion francs, Jordan said. ...