THE BANKING CRISIS OF CREDIT SUISSE: ORIGINS, CONSEQUENCES, AND REFORM PROPOSALS

Abstract

This paper focuses on the major factors originating the banking crisis of Credit Suisse —a systemically relevant bank not just for Switzerland (where it is domiciled) but also for the global economy as a whole. The second section explains the origins of such a crisis, which are to be found in the possibility for banks to provide any credit line they consider profitable, in particular as regards speculation, independently of the amount of pre-existent savings. The third section points out the consequences of this crisis for both financial institutions and the whole economic system. The fourth section puts to the fore a monetary-structural reform disposing of the possibility for banks to open credit lines for “non-gdp-based transactions” without having enough funds to finance them. The last section concludes with some further considerations about the existing financial market regulations, in particular as regards those minimum capital requirements that banks must respect, once they grant any credit line that is considered profitable for them.