Federal Council discusses outcome of extraordinary session

Bern, 19.04.2023 - At its meeting of 19 April 2023, the Federal Council acknowledged that the National Council had twice rejected the emergency guarantee credits for the Swiss National Bank (SNB) and UBS during the extraordinary session of 11/12 April 2023. Parliament debated these credits on the premise that a rejection would have no legal effect on the Confederation's emergency commitments made to the SNB and UBS. The Federal Council shares this legal opinion. Without these commitments, the takeover of Credit Suisse by UBS, and thus the stabilisation of the financial system, would not have been possible. However, the Federal Council will give the fullest consideration to Parliament's position in its future work and decisions.

In the extraordinary session of 11 and 12 April 2023, the Council of States approved the federal decrees on the guarantee credits requested by the Federal Council; whereas the National Council rejected them twice in the overall vote, which meant that the matter was formally referred back to the Federal Council.

At its meeting of 19 April 2023, the Federal Council acknowledged Parliament's decision. It confirms that this decision has no legal effect on commitments already entered into by the Confederation vis-à-vis third parties – i.e. the SNB and UBS – because both commitments were already binding when the emergency ordinance was issued. However, in order for the Confederation to be allowed to undertake these commitments, it required the prior approval of the Finance Delegation in accordance with Article 28 paragraph 1 of the Financial Budget Act. This approval was given on 19 March 2023. The Federal Council reiterates that the commitments and assurances made to the SNB and UBS on the same day were necessary due to the exceptional circumstances and the high degree of urgency in order to avert a financial crisis and thus severe damage to the Swiss economy. If non-approval of the credits by Parliament were to result in the Confederation having to fully or partially reverse commitments already undertaken, the Federal Council's ability to act in times of crisis would be significantly impaired, which would contradict the will of Parliament as expressed in the partial revision of the procedure in 2010. In the present case, the goal of stabilising the financial system would not have been achieved. This applies both to the guarantee for the SNB and to the federal guarantee for UBS.

The Federal Council notes that this legal opinion was also the basis for Parliament's decision. In a note dated 24 March 2023, the Secretariat of the Finance Committees stated that a negative decision by Parliament would have no impact on external relationships because the funds had already been fully committed by the Confederation following approval by the Finance Delegation: on the one hand, by means of a signed agreement between the Confederation and the SNB for a default guarantee in the amount of CHF 100 billion and, on the other hand, by means of an assurance by the Federal Council to UBS for a loss guarantee in the amount of CHF 9 billion, which was and remains a prerequisite for UBS to take over Credit Suisse. This legal opinion was undisputed in the parliamentary discussions before and during the extraordinary session, as was also manifested in the vote of approval by the President of the Council of States Finance Committee on 11 April 2023.

This legal opinion of the Federal Council and the Secretariat of the Finance Commissions is based on the analysis of the materials on the Financial Budget Act (see also the note of the Secretariat of the Finance Commissions and the FDF factsheet). The view that in terms of external relationships, the funds for the guarantees are already bindingly committed vis-à-vis the SNB and UBS is also shared by the Federal Office of Justice (FOJ).

Federal Council will give Parliament's position due consideration

The Federal Council's priority remains to minimise the damage and risks for the state, taxpayers and the economy. It will take Parliament's position into account in its future work and decisions. On the one hand, this applies to the negotiations with UBS on the guarantee contract, but only to the extent that this does not jeopardise the takeover of Credit Suisse by UBS and thereby the stabilisation that has been achieved. On the other hand, it applies to the work within the framework of the thorough review of the events and the fulfilment of the postulates referred by Parliament, which among other things concern questions regarding emergency law. In this context, the Federal Council will also examine the question of whether Parliament is adequately involved in urgent financial decisions according to the current legal arrangements, or whether adjustments are necessary and possible without curtailing the Confederation's constitutional powers and thus the state's ability to act in times of crisis.

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