Swiss National Bank Considers Breaking Up Banks

“Too big to fail” problem may be solved in Switzerland by the central bank

One of the issues that has been plaguing the U.S. throughout this financial crisis is the "too big to fail" factor. The Swiss National Bank thinks it might have a potential solution. Yesterday, the SNB announced that it was thinking about using emergency powers to break up large banks. The New York Times reports on the matter:

“There can be no more taboos, given our experiences of the last two years,” Philipp Hildebrand, the vice chairman of the bank, said in Berne, Switzerland. Swiss authorities, including the central bank and the Financial Market Supervisory Authority, signaled an aggressive approach to the “too big to fail” problem that has vexed policy makers in Europe and the United States.

This move might also be accompanied by direct invervention with the Swiss franc. Swiss officials have been hinting that they may intervene directly in the FX market with regard to the franc, and things may be reaching the point that the Swiss actually go through with it.