A new study by the Bank for International Settlements reveals that the decision made during Credit Suisse's 2023 collapse was not limited to a single bank but also shook confidence in the regulatory framework. According to the study, the Swiss regulatory authority's failure to activate the bail-in mechanism damaged the credibility of supervisors.
The report states that the Swiss Financial Market Supervisory Authority, known as Finma, prepared a resolution plan during the bank's failure process. This plan foresaw writing down Credit Suisse’s capital and Additional Tier 1 bonds while converting certain debt items.
However, ultimately not implementing this mechanism sent a different message to the markets. The study argues that this choice could reduce market discipline over weak banks and erode investors' trust in the rules during crises.
Credit Suisse's collapse in 2023 caused significant reverberations in the global financial system. The crisis experienced by the bank was also seen as a major turning point for European banking.
The new study emphasizes that such decisions are not merely technical details of crisis moments but also influence perspectives on future resolution and liquidation processes. For this reason, the Credit Suisse case remains central to debates on rule predictability in banking supervision.