Liquidity requirements proposed by the Swiss would cost banks little or nothing extra

According to government documents released on Thursday, Switzerland recommended updated requirements to guarantee large banks maintain enough liquidity to withstand shocks, but the proposed modifications will cost banks little or nothing in additional capital and liquidity holdings.

The proposed revisions, which were sent out for public comment on Thursday, are intended to ensure that systemically important banks (SIBs), such as Credit Suisse (SIX: CSGN) and UBS, remain resilient in a variety of stress scenarios, including those not adequately covered by current rules, according to the government. “Although the revised liquidity requirements for SIBs will introduce legally stricter liquidity requirements compared to the TBTF (too big to fail) regulation in force today, the authorities assume that this regulatory proposal will have little impact due to the already high level of liquidity,” the finance ministry said in a report on Thursday.

The idea would “neither considerably enhance nor decrease the overall liquidity” held by systemically important institutions, according to current assessments. According to the ministry, the proposed modifications are not expected to have a significant impact on banks’ cost of capital.