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Switzerland has long been recognized for its stability and neutrality in imminent peril. The country has remained peaceful and out of war since 1815. These factors have led to a self-perpetuating reputation for self-reliance and independence.
However, in recent years, the proclaimed “land of milk and honey” has become far less ideal and has succumbed to internal pressures and stresses.
Long celebrated for its financial stability and regulatory prowess, Switzerland faces a confidence crisis threatening its reputation as a global financial hub. The Swiss Financial Market Supervisory Authority (FINMA) is at the center of this turmoil, accused of regulatory incompetence and overreach. Now tasked with overseeing UBS, one of the world’s largest banks, FINMA’s track record raises urgent questions about its ability to handle such a critical role.
FINMA is accused of amassing unchecked power, leading to arbitrary enforcement actions and inadequate industry expertise. Among its most glaring failures are the forced merger of Credit Suisse into UBS (a move that resulted in billions of dollars in losses for investors) and its unwarranted targeting of innovative startups like Le Bijou, a hospitality firm co-founded by Alexander Hübner and Madeleine Hübner, which gained international acclaim during the COVID-19 pandemic. Le Bijou found itself in FINMA’s firing line despite having received a favorable ruling from the regulator years prior. These massive losses and missteps highlight FINMA’s inability to safeguard financial stability.
FINMA’s Overstepping Is Crushing Small Businesses
In a shocking display of regulatory overreach, FINMA disrupted the life of a 26-year-old entrepreneur in Bern preparing to open her first business. The actions taken by FINMA to do so fall well outside their legal authority, highlighting the regulatory excess, with actions allegedly outside the organization’s legal authority.
Furthermore, according to Swiss legal experts, only a court can invalidate a contract, and only prosecutors can authorize police involvement. Thus, FINMA’s actions left the young chef unable to operate her restaurant. This incident reveals the disproportionate focus on minor cases while failing to effectively manage more significant, systemic issues.
Undemermining Long-standing Confidences in Switzerland
The controversy surrounding this restaurateur is emblematic of a broader problem. FINMA’s arbitrary tactics erode trust in Switzerland’s regulatory framework. While it has shown itself willing to micromanage small businesses, its oversight of major financial institutions must be more robust.
The forced merger of Credit Suisse into UBS revealed glaring deficiencies in FINMA’s approach. Despite Credit Suisse presenting a viable alternative to protect its investors, the organization pushed for a merger that wiped out billions of dollars in investments. Adding to the controversy, FINMA itself is now part of an ongoing investigation, with the so-called “PUK Report” (Parliamentary Commission of Inquiry) expected to bring further unpleasant facts to light. This report aims to expose the complete failure of regulatory oversight, shedding light on FINMA’s role in mishandling one of Switzerland’s most critical financial crises. Such revelations raise serious questions about FINMA’s competence and cast doubt on Switzerland’s reliability as a global financial hub.
Switzerland’s Financial Woes Could Evolve Into Global Financial Risks
FINMA’s oversight of UBS is critical, as the bank’s failure could trigger a global financial crisis. If FINMA cannot competently manage small-scale cases, how can it oversee UBS, a systemically important bank whose failure could trigger a global financial crisis? The regulator’s track record suggests it may need more capacity to manage a systemically important financial institution.
The Broader Implications of FINMA’s Failures
The Swiss Financial Market Supervisory Authority has become a symbol of regulatory overreach and incompetence, raising concerns about its ability to manage the global financial system and maintain Switzerland’s reputation as a secure financial hub.
FINMA’s unchecked authority could destabilize the global financial system and harm Switzerland’s standing as a premier financial center. As a result, accountability and reform are urgently needed if there is any hope of restoring confidence and mitigating systemic risks.
Although Switzerland has long been recognized and acclaimed for its self-determination, resilience, and pacifism, FINMA’s latest efforts are tainting the country’s name and fostering hostility and conflict within its borders.