Capital Buffer On Swiss Banks Imposed

14 Feb 2013

Switzerland is the first big financial centre that has made its banks to hold extra capital to calm overheating parts of the economy. The overheating is due to the boom in housing market.

Swiss house prices have increased by a whooping 77% in the last 10 years.  

The Swiss government has accepted a proposal from the SNB that banks need to build up so-called “counter-cyclical capital buffers” by holding extra capital worth 1% of the risk-weighted assets in their mortgage portfolios.

“This sustained momentum has resulted in imbalances which pose a considerable medium-term risk to the stability of the Swiss banking sector, and hence to the Swiss economy,”

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