Daily Gold Market Report

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Switzerland Explores New Banking Measures to Prevent Future Runs

(USAGOLD – 11/15/2023) Gold is gaining momentum as U.S. PPI drops 0.5%, sees biggest decline since April 2020. Gold is trading at $1,966.25, up $1.96. Silver is trading at $23.38, up 29 cents. Swiss authorities and leading banks, including UBS, are discussing new measures to prevent bank runs following Credit Suisse’s rescue earlier this year, Reuters reports. These talks, which are part of a broader review of the country’s banking rules, primarily target top Swiss banks and could significantly impact their wealth clients. Among the proposed measures are options to stagger a larger portion of withdrawals over extended periods and the possibility of imposing fees on exits. Another suggestion under consideration is to offer higher interest rates to clients who commit their savings for longer durations. These discussions are in the initial stages and involve the Swiss National Bank and the Swiss Finance Ministry. A representative from the finance ministry indicated that these discussions are part of an overall evaluation of the regulatory framework for banks deemed “too big to fail.” A report on this matter is expected to be published by the Swiss government in the upcoming spring​.

UBS holds about one-third of all bank deposits in Switzerland and serves a majority of the country’s banks and large pension funds. Its assets amount to 448% of Switzerland’s GDP, roughly equivalent to $100 trillion in US terms. This makes UBS not just “too big to fail” but also “too big to bail out,” suggesting that in a financial crisis, depositors might bear the cost of a bailout.
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