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Swiss lawmakers are looking to postpone the implementation of a permanent public liquidity backstop (PLB) for major banks such as UBS, as part of an upcoming government proposal on capital requirements. The unanimous decision by an upper house committee is subject to approval in the upcoming spring session of parliament, potentially delaying the PLB's establishment in Switzerland until after 2026.

A PLB serves as a financial rescue option for banks in dire situations. For instance, in 2023, Credit Suisse utilized such a measure under emergency legislation before its collapse and subsequent acquisition by UBS. Lawmakers determined that the specific framework of the permanent PLB can only be finalized within the larger scope of Switzerland's regulations governing systemically significant institutions, following consultations with experts from Bern University and other academic sources.

While the committee generally endorses the PLB, it suggested deferring detailed discussions until the Swiss government articulates its approach to regulating banks deemed too-big-to-fail. This decision was conveyed in a press release issued on Tuesday.

Recently, Swiss legislators intensified their calls for enhanced oversight of the financial industry following their examination of Credit Suisse's downfall. Consequently, they put forth far-reaching recommendations and demands to the government.