Swiss Economicblogs.org
With Cyril Monnet and Remo Taudien. University of Bern Discussion Paper 25.01, January 2025. PDF. The proposed revision of the Swiss Banking Act introduces a public liquidity backstop (PLB) for distressed systemically important banks (SIBs), in part to facilitate resolution. We examine the impact of the PLB on fiscal balances, societal welfare, and the incentives of bank shareholders and management. A PLB, like too-big-to-fail (TBTF) status, acts as a subsidy for non-convertible...
Read More »