The Swiss government has put their foot down with UBS and Credit Suisse and will be giving tougher capital requirements in hopes to avoid any future potential financial crisis’s. The reason for tough capital requirements is based on the idea that banks the size of UBS and Credit Suisse will grow to and become so big and would for see trouble at some point and have to rely on tax payers to help bail them out. The Swiss government explained in a statement while speaking with Yahoo News, “Additional measures and adjustments are required to boost the resilience of systemically important banks further and to make their restructuring or orderly resolution possible without taxpayers incurring any costs.”
These precautions are being put in place because of the economic collapse that occurred in the United States, which included the UBS based out of Zurich, Switzerland. Even though these two major banks were given strict requirement and regulations, both banks agreed to the plans by the Swiss government and explained how they now want the Swiss government to follow through with the plans they have set since they are not harming the financial sector in which they are involved in. Both companies hope that the government also follows and stays in a similar realm of international standards since both are internationally known and have many accounts outside of Switzerland.
The next idea or project in place is for leverage ratios to be formally introduced and laid out based and followed by international laws and regulations. Although his move is not expected to take place until the end of 2015 or early 2016. UBS is pushing for the leverage ratios since they will follow international rules which puts them in a great position to not default or collapse like they had in the past. This leverage ratio will be put into place to measure the banks capital to its total assets, which means they will be able to tell and understand when and if something will fail or begin to crumble.
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