The Swiss National Bank (SNB) together with the Swiss government and financial market regulator FINMA helped orchestrate the emergency takeover of Credit Suisse by UBS on Sunday to prevent the collapse of the country's second-biggest bank. In a statement, the central bank said that the measures taken to save the bank have put a halt to the crisis, adding that it was providing large amounts of liquidity assistance in Swiss francs and foreign currencies backed by collateral and subject to interest.
On Thursday, the SNB hiked Swiss interest rates by half a percentage point to 1.5%, bringing them in line with the majority of forecasts in a Reuters poll of economists. However, Swiss inflation stands at 3.4%, far above the Swiss National Bank's target range of 0-2%. The central bank said that the latest rise in inflation is mainly due to higher prices for electricity, tourism services, and food, but noted that it cannot rule out additional rises in the SNB policy rate to ensure price stability over the medium term.
While the Sunday night rescue prevented the banking crisis from escalating, it left Swiss taxpayers liable for potential losses, and the SNB committed to providing substantial loans should further help be required. The rescue operation tarnished Switzerland's reputation among some investors after FINMA wiped out the entire value of Credit Suisse's riskier alternative tier one bonds (AT1s) while allowing the bank's shareholders to walk away with something from the deal. The move caused some investors to consider legal action, but FINMA defended its actions in a statement on Thursday, stating that they were based on the contractual terms of the bonds and an emergency law adopted by the Swiss government on Sunday.