Federal Council Rejects Proposal for Company-Funded Emergency Fund

Systemically important companies should not pay a premium as reinsurance and should pay this into a fund to be created specifically for emergencies. The Federal Council rejects a corresponding proposal from Parliament.

The motion by SVP National Councilor Benjamin Fischer (ZH) calls for a guarantee fund for systemically important companies.

According to the text, an unavoidable rescue of a systemically important company would have to be made from this fund in the future. Loans or guarantees from the federal government or the national bank to rescue a systemically important company may only be granted in favor of this fund. In addition, clearly defined rules and conditions must be observed.

Fischer justifies his initiative by saying that systemically important companies have the potential to cause major damage. This risk is currently borne by the general public. The implicit, free state guarantee for a few causes an “unacceptable market distortion”. An appropriate premium for systemically important companies is therefore indicated.

In its statement, the Federal Council shares the view that state bailouts of large companies are problematic because of the liberal economic policy. This is precisely why he also considers the required compulsory insurance to be the wrong way to go.

In addition, the specific determination of those liable to pay premiums and the determination of individual risk premiums would be “associated with hardly solvable delimitation questions”. That writes the Federal Council. The priority should be a comprehensive evaluation of the “too big to fail” regulation for systemically important banks. In the electricity industry, the created and highly controversial rescue package for large companies should also be replaced as quickly as possible.