Swiss call for change to 'unrealistic' bank liquidity rules

LONDON, April 10 (Reuters) - Switzerland called on Wednesday for changes to global measures to prevent liquidity crunches which were introduced after the global financial crisis, to make bank runs less calamitous.

A year after the collapse of Credit Suisse, which was bought by UBS (UBSG.S)New Tab, opens new tab in an emergency rescue, Swiss officials and regulators are examining how to change liquidity rules to make banking deposits more stable and avoid bank runs.

The Swiss government said in a report on how to regulate banks deemed "too big to fail" (TBTF) that liquidity requirements should be addressed internationally.

It said the liquidity coverage ratio (LCR), a key measure to gauge a bank's ability to meet its cash demands, should be reviewed and banks should be allowed to fall below the current minimum that regulators globally have agreed.

While regulators in Europe and the U.S. are looking into whether LCRs are fit for purpose, the Swiss call gives the most detailed insight into what supervisors are thinking since the collapse of Credit Suisse in March 2023.

Switzerland's then second-largest bank saw billions of Swiss francs in deposits exit in a matter of days, burning through what had appeared to be comfortable cash buffers.

In Europe, banks must hold a minimum LCR of 100%, even when depositors and creditors are withdrawing cash, but th...
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