Yesterday the alarm bell rang loudly Single Banking Resolution Board (SRB)warning them central banks European countries, since they also exist in Eurozone systemic banks are too big to let them collapse and will be forced to inject liquidity into them in the event of a crash. In its warning, the SRB, the European body that handles bank failures and plays an important role in the bloc’s credit stability, cited the case Credit Suisse. As he pointed out, the collapse and the hasty and sudden rescue of the Swiss bank made it clear that when a systemically important bank is in crisis, then the main and additional emergency support mechanisms will be exhausted.

Since the 2008 crisis, regulators around the world have been trying to break the cycle of backing banks with taxpayer money. However, the fact that a state of emergency was declared and the citizens of Switzerland and the central bank of the country were forced to support the unexpected acquisition of Credit Suisse by the largest Swiss bank, UBSis a sad reminder that very large banks should not be allowed to fail.

It is recalled that the Swiss central bank agreed to open additional credit lines for 200 billion Swiss francs as part of an agreement to acquire Credit Suisse by UBS. For his part, in the end, UBS CEO Sergio Ermotti called the loss scenario for the Swiss government or SRB “highly unlikely”.

As a warning, the United Banking Council cited the case of Credit Suisse.

It is noted that the size of the SRR is expected to double by the end of the year, with emergency support to finance the Single Settlement Fund (SRF) of eurozone banks. The SRF is based on bank contributions and amounted to 66 billion euros. Ultimately, it will amount to at least 1% of deposits in the eurozone countries. The case of Switzerland confirmed that the needs of a global systemically important bank exceed the capacity of SRF and bailouts. Indeed, last week SRB board member Sebastiano Laviola stressed that “the involvement of the Eurosystem is still necessary” in solving the problem.

According to him, the impact of the collapse of Credit Suisse and US banks on the rest of the bloc’s institutions was limited. This confirms the stability of banking rules in the EU, but is not a reason for complacency. Referring again to the Credit Suisse case, Laviola emphasized that with investor-linked funding lines, “the risk of a crisis spreading is reduced and bank resolution strategies are supported.” The Eurosystem that Sebastiano Laviola spoke about consists of European Central Bank and the central banks of the member countries of the eurozone. As for the large systemic EU banks, which theoretically may need support from central banks in the event of a major crisis, these are: Banco Santander SA, BNP Paribas SA, Credit Agricole Group, Deutsche Bank AG, Groupe BPCE, ING Groep NV, Societe. Generale SA and UniCredit SpA.