Swiss Finance Minister Calls for International Rules on Winding Up Global Banks

International financial authorities need to collaborate on establishing legal frameworks for handling the potential collapse of large, globally interconnected banks, according to Switzerland's Finance Minister Karin Keller-Sutter.

The Issue:

• The concept of "too big to fail" banks raises concerns about how to manage their collapse without crippling the financial system.
• Standardisation of international rules is seen as crucial for effective handling of such situations.

The Swiss Perspective:

• Keller-Sutter highlights the potential legal roadblocks in winding up such banks due to their complex international structures.
• She cites the case of Credit Suisse, a Swiss bank that faced collapse last year, as an example of these challenges.

The Proposed Solution:

• Keller-Sutter advocates for discussions with the Financial Stability Board and other finance ministers, including her German counterpart Christian Lindner.
• Her focus lies on mitigating the risks associated with a "bail-in" approach, where creditors are forced to absorb losses to recapitalize the failing bank.

The Call to Action:

• The need for international cooperation in establishing clear and effective legal frameworks for winding up globally interconnected banks is being emphasized by the Swiss Finance Minister.

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