## Switzerland: Financial System Stability Assessment

_IMF Staff Country Reports, June 26, 2019_

## Source details

**Canonical URL:** [Switzerland: Financial System Stability Assessment](https://www.imf.org/en/publications/cr/issues/2019/06/26/switzerland-financial-sector-assessment-program-47045)

## Other formats

- [Markdown version](/en/publications/cr/issues/2019/06/26/switzerland-financial-sector-assessment-program-47045/index.md)
- [Structured JSON version](/en/publications/cr/issues/2019/06/26/switzerland-financial-sector-assessment-program-47045/index.json)
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## Bibliographic details
- Published: June 26, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498321662.002

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### Key findings on resilience and vulnerabilities
- Swiss financial institutions are well capitalized and could withstand the severe shocks under the adverse stress test scenarios.
- Macrofinancial vulnerabilities are deepening.
- Important reforms have been made since the 2014 FSAP, but several critical recommendations and emerging challenges have yet to be fully addressed.
- Capital buffers have increased across all categories of banks.
- The two global systemically important banks have downsized and deleveraged significantly since the global financial crisis, but since 2013 they have been growing again.
- Macroprudential measures have not been taken since 2014 and are constrained by having only one mandated tool and a self-regulation agreement with banks.
- The financial supervisor (FINMA) has developed into a trusted supervisor, but as a small entity, it relies heavily on external auditors to conduct on-site supervision; the associated conflict of interest and supervisory objectivity risks need to be carefully managed.
- The combination of an ex-post funding mechanism, a low cap on banks’ contributions, and a private deposit insurance agency run by active bankers weakens the crisis management arrangements.

### Analysis of supervisory and crisis-management arrangements
- Supervisory capacity:
  - FINMA has gained trust as a supervisor but is small and dependent on external auditors for on-site supervision.
  - Reliance on external auditors introduces conflict of interest and supervisory objectivity risks that need active management.
- Crisis management weaknesses:
  - The funding mechanism for crisis resolution is ex-post.
  - There is a low cap on banks’ contributions to resolution funding.
  - Deposit insurance is provided by a private agency run by active bankers, which weakens overall crisis management credibility.

### Policy implications and recommendations (implied by findings)
- Address outstanding critical recommendations and emerging challenges identified since the 2014 FSAP to reduce macrofinancial vulnerabilities.
- Broaden macroprudential policy tools beyond the single mandated tool and reconsider reliance on a self-regulation agreement with banks to enable proactive measures.
- Reduce reliance on external auditors for on-site supervision or strengthen safeguards to manage conflict of interest and preserve supervisory objectivity.
- Reform crisis management arrangements to strengthen funding (considering ex-ante mechanisms), revisit the cap on banks’ contributions, and reassess the governance of deposit insurance to avoid conflicts from active banker management.

*International Monetary Fund. Monetary and Capital Markets Department "Switzerland: Financial System Stability Assessment", IMF Staff Country Reports 2019, 183 (2019), accessed 9/5/2026, https://doi.org/10.5089/9781498321662.002*

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## Content in this bundle

- **EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS**
  - [EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS (Markdown version)](/-/media/files/publications/cr/2019/1cheea2019003.pdf.md){rel="alternate" type="text/markdown"}
  - [EXECUTIVE SUMMARY AND KEY RECOMMENDATIONS (PDF)](/-/media/files/publications/cr/2019/1cheea2019003.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2019/06/26/switzerland-financial-sector-assessment-program-47045_