These loans are also secured by preferential rights in bankruptcy proceedings and, in addition, by a federal guarantee - that is to say, they are guaranteed with taxpayers' money (hence 'public' in public liquidity backstop). The interest rate on both types of loan is higher than that charged on the established liquidity assistance facilities. 3/4  BIS - Central bankers' speeches  The dramatic situation and enormous time pressure required the use of emergency law. In granting ELA+, we are going to the limits of what is feasible for the SNB, because with this loan preferential rights in bankruptcy proceedings are the sole security. We provided this liquidity only because rapid action was critical to restoring counterparties' confidence in Credit Suisse and stopping the outflow of client funds. Without the SNB's willingness to provide further liquidity via ELA+, a global financial and economic crisis could easily have been set in motion. In our view, this would have been irresponsible. Thoughts for the future Since the dramatic days of mid-March, the situation has stabilised. Let me now look ahead and share three thoughts with you regarding the future. My first thought is self-evident: Banking regulation and supervision will have to be reviewed in light of recent events. This will require in-depth analysis. Quick fixes must be avoided. However, from the SNB's perspective, there is one important point that needs to be emphasised right now.
After all, each bank fails in its own way, so each case is different, and each decision needs to account for these differences. We need to take all facts into account and assess them case by case, and not against a single yardstick. In short, we must be proportionate. Imagine a bank breaches capital requirements. Then we have to ask how severe that breach is and whether it might just be temporary. If it’s just a marginal breach which could be healed within a reasonable period of time, it might not be proportionate to declare the bank “failing or likely to fail”. We also need to take into account that a bank depends on the markets. So how do they react? A bank in trouble might quickly lose the trust of the markets. This could lead to a bank run, which requires supervisors to act differently. 4/9  BIS central bankers' speeches  So, to sum up: “failing or likely to fail” decisions are not taken automatically but are based on expert judgement. At the same time, they have to be taken case by case and in a proportionate manner. All in all, they are the most difficult decisions a supervisor has to take. And I can assure you that we do not take them lightly. How to resolve a bank Imagine that we have declared a bank failing or likely to fail. What happens next? Well, at that point the resolution authority takes over.