Regulation and Supervision
Switzerland possesses an internationally recognized, progressive financial market regulatory system. It is based on three pillars:
- Macroprudential system supervision. It is exercised by the Swiss National Bank. The Swiss National Bank conducts the country’s monetary policy as an independent central bank with a goal to ensure prices stability and create an appropriate environment for the economic growth. The SNB is responsible for implementing the government’s monetary policy relating to banks and securities dealers and for ensuring the stability of the financial system. Macroprudential supervision is aimed to protect the financial center Switzerland.
- Microprudential supervision of banks is aimed to protect the creditors & investors. It is exercised by the Swiss Financial Market Supervisory Authority (FINMA). FINMA protects creditors, investors and policy holders, ensuring the smooth functioning of the financial market and preserving their reputation. The FINMA is the highest bank supervisory authority in Switzerland and is independent from the SNB. Through its supervisory activities, FINMA ensures that supervised institutions compy with the requisite laws, ordinances, directives and regulations and continue at all times to fulfill the licensing requirements.
FINMA is strongly involved in the shaping of the legislative framework for banks by substantial influence on the drafting of Swiss Federal Legislation on macro level, and also by issuing exact circulars. Generally, supervision in Switzerland is based on division of tasks between FINMA and authorized audit firms. Under this two-tier supervisory system, FINMA has the responsibility for overall supervision and enforcement measures while the authorized audit firms carry out official duties on behalf of and subject to sanctions imposed by FINMA.
- Self-regulation of the Swiss banking system is presented through the Swiss Banking Association. It is the leading professional organization of the Swiss financial Center. Its main purpose is to maintain and promote the best possible framework conditions for the Swiss Financial Center in order to protect the Banks and its clients.