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Europe > Switzerland

You are looking at 1 - 10 of 17 items for :

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Cover IMF Staff Country Reports
Switzerland: Financial Sector Assessment Program; Technical Note- Financial Safety Net and Crisis Management Arrangements
International Monetary Fund. Monetary and Capital Markets Department
Financial Sector Assessment Program; Technical Note- Financial Safety Net and Crisis Management Arrangements
Keywords:
ISCR; CR; State secretariat; insurance fund; financial market; resolution power; steering committee; bridge bank tool; payout capability; government guarantee; State secretary; financial support; pertinent divisions meet; FINMA CEO; deposit insurance; Bank resolution framework; Bank resolution; Lender of last resort; Crisis management framework; Global
Cover IMF Working Papers
Friend or Foe? Cross-Border Linkages, Contagious Banking Crises, and “Coordinated” Macroprudential Policies
Mr. Seung M Choi
,
Ms. Laura E. Kodres
, and
Jing Lu
This paper examines whether the coordinated use of macroprudential policies can help lessen the incidence of banking crises. It is well-known that rapid domestic credit growth and house price growth positively influence the chances of a banking crisis. As well, a crisis in other countries with high trade and financial linkages raises the crisis probability. However, whether such “contagion effects” can operate to reduce crisis probabilities when highly linked countries execute macroprudential policies together has not been fully explored. A dataset documenting countries’ use of macroprudential tools suggests that a “coordinated” implementation of macroprudential policies across highly-linked countries can help to stem the risks of widespread banking crises, although this positive effect may take some time to materialize.
Keywords:
WP; break; banking crisis; center; house price growth; Trade Linkages; Financial Linkages; Financial Crisis; Macroprudential Policies; trade partner; credit growth; loan recipient; crisis probability; Housing prices; Banking crises; Credit; Macroprudential policy; Macroprudential policy instruments; Global
Cover IMF Working Papers
Whose Credit Line is it Anyway: An Update on Banks' Implicit Subsidies
Tryggvi Gudmundsson
The post-crisis financial sector framework reform remains incomplete. While capital and liquidity requirements have been strengthened, doubts remain over other aspects, including the fact that expectations of government support for systemically-important banks (SIBs) remain intact. In this paper, we use a jump diffusion option-pricing approach to provide estimates of implicit subsidies gained by these banks due to the expectation of protection to creditors provided by governments. While these subsidies have declined in the post-crisis era as volatility has declined and capital levels have increased, they remain non-trivial. Even conservative parameterizations of default and loss probabilities lead to macroeconomically significant figures.
Keywords:
WP; fair value; Implicit subsidies; systemically-important banks; capital regulation; bank assets; asset price assumption; asset volatility; recovery rate; bank's assets; market value of assets; value destruction; Asset prices; Stocks; Asset valuation; Global systemically important banks; Global
Cover IMF Working Papers
Bank Profitability and Risk-Taking
Natalya Martynova
,
Mr. Lev Ratnovski
, and
Mr. Razvan Vlahu
Traditional theory suggests that more profitable banks should have lower risk-taking incentives. Then why did many profitable banks choose to invest in untested financial instruments before the crisis, realizing significant losses? We attempt to reconcile theory and evidence. In our setup, banks are endowed with a fixed core business. They take risk by levering up to engage in risky ‘side activities’(such as market-based investments) alongside the core business. A more profitable core business allows a bank to borrow more and take side risks on a larger scale, offsetting lower incentives to take risk of given size. Consequently, more profitable banks may have higher risk-taking incentives. The framework is consistent with cross-sectional patterns of bank risk-taking in the run up to the recent financial crisis.
Keywords:
WP; interest rate; monetary policy; Banks; Risk-Taking; Bank Capital; Repo Markets; Crises; market-based investment; risky investment; investment X; side investment; project investment; Bank soundness; Accommodative monetary policy; Investment banking; Stocks; Global
Cover IMF Working Papers
An Overview of Macroprudential Policy Tools
Mr. Stijn Claessens
Macroprudential policies – caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies – have become part of the policy paradigm in emerging markets and advanced countries alike. But knowledge is still limited on these tools. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues. Some countries, especially emerging markets, have used these tools and analyses suggest that some can reduce procyclicality and crisis risks. Yet, much remains to be studied, including tools’ costs ? by adversely affecting resource allocations; how to best adapt tools to country circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting tools.
Keywords:
WP; externality; monetary policy; bank; credit crunch; Financial stability; financial intermediation; externalities; market failures; procyclicality; systemic risks; capital requirement; resource allocation; interconnectedness externality; market failures policy; bank leverage; house price inflation; assets bank; foreign currency; Macroprudential policy; Systemic risk; Financial sector stability; Credit; Global
Cover IMF Staff Country Reports
Switzerland: Selected Issues Paper
International Monetary Fund. European Dept.
The Selected Issue Paper discusses the Swiss National Bank’s (SNB) balance sheet risks and policy implications. Despite increased profit allocations, SNB capital has not kept pace with its growing balance sheet. The paper also explores the empirical determinants of pressures on the Swiss franc with the purpose of sorting out the relative importance of four factors: conventional monetary policy stance in other advanced countries and large emerging markets; quantitative easing and other unconventional policies pursued by major central banks; the euro area sovereign debt crisis; and global risk aversion.
Keywords:
ISCR; CR; interest rate; bank; SNB; balance sheet; price; interest rate differential; SNB capital; modeling choice; mortgage interest rates; fixed income; house price; sight deposit; subprime crisis; nominal exchange rate; Negative interest rates; Mortgages; Financial statements; Housing prices; Global
Cover IMF Staff Country Reports
Switzerland: 2013 Article IV Consultation
International Monetary Fund. European Dept.
The Article IV Consultation discusses the IMF Executive Board’s assessment of economic developments and policies in Switzerland. With the exchange rate floor in place for more than one year, the Swiss economy has been relatively stable. Although overall export growth is weak, the external position remains comfortable, reflecting high investment income and strong export performance in some sectors. Executive Directors noted that, notwithstanding Switzerland’s stable economy and strong policy frameworks, risks stemming mostly from the euro area crisis and vulnerabilities in the domestic financial sector have clouded the near-term outlook.
Keywords:
ISCR; CR; mortgage lending; debt; growth outlook; lending; recession; exchange rate floor; debt brake rule; debt-brake rule; Mortgages; Exchange rates; Negative interest rates; Financial statements; Global; Europe
Cover IMF Working Papers
Survey of Reserve Managers: Lessons from the Crisis
Aideen Morahan
and
Mr. Christian B. Mulder
This paper reports in detail on a survey that was circulated to reserve managing central banks of IMF member countries in April 2012. The survey aims to gain further insight into how reserve managers have reacted to the crisis to date. The survey also aims to understand how reserve managers arrive at their strategic asset allocation and how they operate their risk management frameworks in practice. Some of the key themes that emerge from the survey include potential procyclical and counter cyclical behavior by reserve managers, increased focus placed on returns and wide variability across countries in how the currency composition of reserves is derived.
Keywords:
WP; reserve manager; central bank; lower income country; yield; International Reserves; Foreign Currency Reserves; Official Reserves; currency composition; excess reserves; flight to quality; mechanisms well; currency risk; reallocation strategy; Currencies; Credit risk; Credit ratings; Reserves management; Global
Cover IMF Staff Country Reports
Kingdom of the Netherlands-Netherlands: Publication of Financial Sector Assessment Program Documentation: Technical Note on Financial Sector Supervision: The Twin Peaks Model
International Monetary Fund
The global financial crisis has tested the effectiveness of supervision under the “Twin Peaks” model. The crisis revealed the strengths of the “Twin International Peaks” model, as decisions were able to be made in a timely manner to contain the crisis, and clear divisions of powers and responsibilities were instrumental in ensuring effective coordination between key agencies. However, the crisis also exposed certain areas where improvements could strengthen the “Twin Peaks” framework. Intensive and well-focused efforts are being made to strengthen the supervisory framework.
Keywords:
ISCR; CR; bank; AFM coordination; DNB; financial product; AFM; prudential supervision; DNB's role; conduct-of-business supervision; rule-making authority; credibility of DNB; DNB's market; Financial sector stability; Systemic risk; Insurance companies; Global
Cover IMF Staff Country Reports
Switzerland: 2011 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Switzerland.
International Monetary Fund
Although progress has been made in strengthening the Swiss economy, systemic risks posed by large banks as well as revisions to the macroprudential framework are still in train. The authorities welcomed the too-big-to-fail (TBTF) legislation and intervention of the Swiss National Bank (SNB) on strengthening financial sector stability, and stressed the need of a strong macroprudential framework and a legal framework with regard to crisis prevention. The authorities supported adherence to the Swiss debt brake rule, and emphasized that sustainability of public finances should be further improved.
Keywords:
ISCR; CR; FINMA; foreign direct investment; appreciation; capital; GDP; monetary policy stance; staff's assessment; net trade contribution; federal budget; information exchange; Mortgages; Exports; Income; Insurance companies; Global; Middle East