While even the European Union realizes that it has regulated too much, Switzerland must not fall into the same trap.
The year 2024 ended with a fireworks display of big news, for the economy in general and the financial sector in particular. But these are intermediate stages, which can develop in one direction or another. While the European Union itself admits that its excessive regulation harms its competitiveness and has committed to reducing companies’ information obligations by 25%, Switzerland would be well advised to follow the same path. The state’s fear of the slightest accident leads each profession to spend 10% to 20% of its time justifying what it does rather than doing it.
Of course, a framework must always be established within which individual responsibility must be exercised. The Parliamentary Commission of Inquiry (CEP) published its report on the Credit Suisse affair just before Christmas. Overall, we seem to have learned the right lessons from this collective debacle. Coordination between authorities must be improved in times of crisis. It is necessary to introduce the Public Liquidity Backstop into ordinary Swiss law without further delay, as other international financial centers have done. And to avoid having to resort to this ultima ratio as much as possible, the most important thing seems to us to be to expand the supply of liquidity by the BNS to a bank when the latter is no longer able to obtain it on the market, because of a rumor for example. Furthermore, it should be noted that the CEP’s recommendations only target systemically important banks. The CEP is rightly not proposing to strengthen the rules for all banks, there is no need for this. In any case, it is not a pile of rules that will avoid a new crisis, but above all transparency, communication and the courage to admit when a mistake has been made.
How could the financial sector know about issues that the issuers themselves do not publish?
For its part, the Council of States during the last session adopted the law on the transparency of legal entities by 26 votes to 6 and 3 abstentions. Above all, this involves creating a central register of economic beneficiaries of Swiss companies. They must already know them, but the authorities cannot currently carry out searches based on the name of a beneficial owner. The register fills this gap, to improve the fight against money laundering and the financing of terrorism, but also against various frauds. The register will not be accessible to individuals, except, curiously, to financial intermediaries “to the extent that its data is necessary for the fulfillment of their due diligence obligations provided for by the LBA. The use of the data is limited to this purpose only.” So that the register also brings added value to financial intermediaries and Swiss companies, the bill has been amended to specify that a “presumption of accuracy applies to entries in the transparency register”. The conjunction of these two texts should now lead to the elimination of reporting of discrepancies by financial intermediaries.
At the beginning of the year, the climate protection law and its implementing ordinance came into force in Switzerland. It is therefore now expected that all companies will reduce their greenhouse gas emissions to net zero by 2050 at the latest. If they decide to rely on a roadmap (or “transition plan”) to do this, it must at least contain an assessment of all direct emissions and indirect emissions (Scopes 1 and 2) and their reduction trajectory. The integration of relevant emissions generated upstream and downstream (Scope 3), however, is optional. However, under the pretext of their different commercial activity, companies active in the financial sector will have to meet higher minimum requirements and also plan a Scope 3 emissions reduction trajectory for the companies in which they invest or finance! But how could the financial sector know about issues that the issuers themselves do not publish?
These three examples are of course not exhaustive. But they recall the importance of the principle of proportionality in administrative law: a measure imposed by the State must be capable of producing the expected results, these must not be able to be achieved by a less incisive measure and there is a reasonable relationship between the desired goal and compromised private interests, in this case entrepreneurial freedom.
