Liko-Bank – Europe’s last resort?

Few people expect a large bank to carry enough capital to meet every conceivable financial and operational catastrophe – except perhaps Daniel Zuberbühler, director of the Swiss Federal Banking Commission. In recognition of this, regulators and bankers are wrestling with the question of who should provide liquidity if a “too-big-to-fail” bank gets into trouble and threatens dislocation of the financial system?

The possible choices are: central banks as lenders of last resort; insurance; or mutual insurance by banks themselves.