Switzerland is considering limiting withdrawals in the event of a Bank Run

Switzerland is reportedly on the verge of drafting a law aimed at protecting its systemic banks against Bank Runs.

Bank Run

Reuters reports that Swiss authorities and banks are discussing new measures to prevent bank withdrawals. These negotiations come as the giant UBS was forced to merge with Credit Suisse earlier this year.

These discussions are part of a broader review of Swiss banking rules for managing banks “too big to fail”. The Swiss Central Bank and the Swiss Ministry of Finance recently began discussions with UBS and probably also Raiffeisen Group as well as Zurich Kantonalbank.

The envisaged measure which raises eyebrows is to spread the withdrawals over time in the event of a Bank Run, suggests one of the sources of Reuters.

In other words, fees (probably equivalent to the losses of the bank in difficulty…) will be imposed on those who want to withdraw their money without delay. This is something that is being considered in everything.

Another proposal: reward customers who lock in their savings for longer by offering them higher interest rates. With, as in the case of life insurance, penalties in the event of unanticipated withdrawal.

So many plans that don’t really bode well for savings.

Bitcoin to protect against bank failures

Credit Suisse customers withdrew the equivalent of 72 billion dollars for the first quarter of 2023 alone. And this after 111 billion withdrawn the previous quarter.

For more context, remember that Credit Suisse is under investigation and the bank has been convicted several times in recent years. Some of its employees have even been imprisoned for various scandals of money laundering, corruption, tax evasion and even industrial espionage.

Business as usual you could say. Withdrawals actually began at the end of 2021 following heavy losses linked to the collapse of investment funds Archegos And Greensill Capital.

“The Credit Suisse case has clearly shown that withdrawals can now be much faster and larger than existing regulations”declared Thomas Jordan, president of the Swiss Central Bank last week.

The fact that the authorities are considering limiting bank withdrawals is worrying. The fear of banking crises is palpable in high places.

And what could be more normal in the face of rising rates, strong geopolitical tensions and the increasingly salient energy crisis…

Who will buy UBS in the event of a Bank Run? The central bank? According to the latest European rules, it is now forbidden to save banks without the latter absorbing part of their losses with the money of their customers beforehand.

Yet another good reason, if one were needed, to hold your savings in your head (12 words are enough) thanks to bitcoin…

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