A stable financial system is central to a well-functioning economy. It is characterised by the fact that its participants fulfil their respective functions smoothly and are able to withstand shocks. The Swiss National Bank makes an important contribution to the stability of the financial system in Switzerland. It performs this task by, among other things, analysing sources of risk to the financial system and identifying areas where action is needed.
In its Financial Stability Report 2026, the SNB presents its latest assessment of the stability of the Swiss financial system.
Key points
- Economic and financial conditions remain challenging for the Swiss financial sector. In particular, the conflict in the Middle East, international trade tensions and the associated geopolitical and macroeconomic uncertainty pose challenges.
- In the Swiss credit market, outstanding loans have continued to increase despite structural and regulatory changes in recent years.
- Vulnerabilities in the Swiss residential real estate market persist and the stock of outstanding mortgages remains high. Households' financial resources mitigate affordability risks.
- Overall, the Swiss banking sector is well placed to face the challenges presented by the current environment. The SNB's stress tests for the domestically focused banks and UBS suggest that most banks could absorb the losses under relevant adverse scenarios.
- Profitability in the Swiss banking sector improved overall in 2025. Thanks to the available capital and liquidity buffers, banks are not only resilient but also have significant lending capacity. However, there are large differences between individual banks and also between the different bank categories. Against the backdrop of lower interest rates in Switzerland, profitability at domestically focused banks declined marginally in 2025.
- The crisis at Credit Suisse showed that banking regulation in Switzerland needs to be strengthened further. The SNB supports the Federal Council's proposed package of measures. Especially important from the SNB's perspective are the measures relating to liquidity and capital. In the area of capital, on 22 April 2026, the Federal Council submitted a proposal to parliament for the full capital backing of banks' participations in foreign subsidiaries.
- Besides banks, non-bank financial intermediaries (NBFIs) also play an important role in the financial system in Switzerland, with potential implications for financial stability. Taking a system-wide perspective, the SNB is currently analysing the risks posed by domestic NBFIs. The work is being prioritised according to the importance of the individual NBFI types and the availability of data.
- Systemically important financial market infrastructures (FMIs) underpin the smooth functioning of financial markets. The SNB oversees these FMIs and thus contributes to the stability of the financial system.
- Stablecoins are currently a niche phenomenon in Switzerland and therefore not a risk to financial stability. Since stablecoins can also circulate outside their currency area, international regulatory coordination is important.
The banking regulations need to be strengthened further
The SNB supports the package of measures proposed by the Federal Council to strengthen the 'too big to fail' (TBTF) regulations. The planned measures are crucial for resolving regulatory weaknesses exposed by the crisis at Credit Suisse and are important for strengthening the stability of the Swiss financial system. From the SNB's perspective, the main focus is on liquidity and capital measures.
Taking precautions against liquidity shortages
To make Swiss banks more resilient to liquidity shocks, the Federal Council made a proposal that requires systemically important banks (SIBs) to prepare a minimum volume of collateral for the purpose of obtaining liquidity support from central banks. In time of need, the SNB can provide liquidity against this collateral. The SNB expects non-SIBs to take the necessary operational steps to participate in the Extended Liquidity Facility (ELF), so that the SNB can support them, too, with liquidity if needed. The SNB also welcomes the Federal Council's proposal to introduce a public liquidity backstop (PLB) in Switzerland.
Strengthening capital backing
The full capital backing of a parent bank's participations in foreign subsidiaries as proposed by the Federal Council on 22 April 2026 is targeted and proportionate. The current partial capital backing makes the parent bank vulnerable to losses on foreign participations, limiting its options to stabilise itself in the event of a crisis, for example by exiting foreign business activities. The measure thus increases a bank's room for manoeuvre in times of crisis. The proposed measure primarily affects UBS. Including its reserves, UBS already has sufficient capital to meet the requirements for full capital backing.
"The full backing of a parent bank's foreign participations with CET1 capital, as proposed by the Federal Council, is right and important. It is targeted, as it addresses a regulatory weakness that was highlighted during the crisis at Credit Suisse. It is also proportionate and will strengthen the stability of the Swiss financial system."
Antoine Martin, Vice Chairman of the Governing Board, Swiss National Bank
Stablecoins are still only a niche phenomenon
Stablecoins are digital assets that are typically pegged to established currencies, such as the US dollar or the Swiss franc. In view of their low volumes, they do not currently pose a risk to financial stability in Switzerland. That said, central banks and regulatory authorities are monitoring developments closely, since stablecoins carry risks that become more relevant as they become more widely adopted. Since stablecoins can also be issued outside their currency area and circulate globally, international regulatory coordination is important. The SNB is therefore engaging at both national and international level in the debate on how to deal with stablecoins.
Non-bank financial intermediaries (NBFIs) can affect financial stability
NBFIs include pension funds, insurance companies, investment funds and other players such as securities firms, mortgage bond institutions and family offices. Besides banks, they play an important role in the financial system in Switzerland and can affect financial stability. The available data only allows for a partial assessment of the size and risks of NBFIs in Switzerland. According to this data, aggregate financial assets held by NBFIs amount to around 170% of the Swiss banking system's financial assets. In aggregate, the largest NBFIs in Switzerland are investment funds, followed by pension funds and insurance companies.
Investment funds largest NBFI type
In aggregate, Swiss investment funds account for the lion's share of Swiss NBFIs and have grown strongly in recent years. Swiss investment funds are regulated and, with a few exceptions, supervised by the Swiss Financial Market Supervisory Authority (FINMA). Direct financial stability risk stemming from investment funds appears limited overall. Investment funds operate with little or no leverage and tend to have lower liquidity risk than banks, making them less vulnerable to shocks. Moreover, individual funds are on average significantly smaller than banks and thus have less potential to cause damage. Nevertheless, investment funds can transmit and amplify shocks due to their interconnections with the financial system.
Hedge funds and government bond markets
The growing influence of hedge funds on the volatility of government bond markets is attracting increasing scrutiny from authorities internationally. In Switzerland, the influence of hedge funds on the government bond market has so far been limited. This is partly due to the fact that Swiss hedge funds are small in both size and number. In addition, the Swiss government bond market has structural features that limit its attractiveness for hedge funds, in particular its small size and comparatively low liquidity. Nevertheless, ongoing monitoring appears appropriate in order to identify potential risks to financial stability at an early stage.