Under Article 28 paragraph 1 of the Financial Budget Act (FBA; SR 611.0), the Federal Council may decide on emergency credit commitments before they are approved by the Federal Assembly. However, this requires the approval of the Finance Delegation of the Federal Assembly (FinDel).
The default guarantee of CHF100 billion to the Swiss National Bank (SNB) can be claimed at the earliest after bankruptcy proceedings have been completed and only in the event that the Swiss National Bank suffers a default and claims it against the federal government. No federal funds will flow before such time. The Federal Council Ordinance of 16 March 2023 on additional liquidity assistance loans and the granting of default guarantees by the Confederation for liquidity assistance loans by the Swiss National Bank to systemically important banks provides for further measures to reduce the financial risk to the Confederation (see Federal Council press release of 19 March 2023).
The guarantee of CHF 9 billion is intended to assume potential losses arising from certain assets that UBS takes over as part of the transaction, should any future losses exceed a certain threshold.
The Finance Delegation met for an extraordinary meeting on 19 March to discuss the Federal Council's proposals. The proposals were presented by the Swiss president, the head of the Federal Department of Finance (FDF) and the director of the Federal Finance Administration. The discussions were also attended by further representatives from the FDF, the director of the Swiss Federal Audit Office and, at times, a representative from the Financial Market Supervisory Authority, the Swiss National Bank as well as the banks concerned.
During the discussions and deliberations, the Finance Delegation considered whether the specific details of the federal government's default guarantee met the criteria of the ordinance adopted by the Federal Council on 16 March. The Federal Council issued the ordinance under its emergency powers (Art. 184 para. 3 and Art. 185 para. 3 Federal Constitution, SR 101).
The Finance Delegation concluded that the conditions set out in the Ordinance of 16 March 2023 had been met and that the credit commitments requested by the Federal Council met the criteria of legality, necessity, unpredictability and urgency. The Finance Delegation always applies these criteria when examining emergency credits.
The Finance Delegation approved the two proposed credit commitments. If an emergency credit commitment exceeds CHF 500 million, one quarter of the members of a Council or the Federal Council may demand that the Federal Assembly be convened within one week of the approval of the Finance Delegation (Art. 28 para. 3 FBA in conjunction with Art. 2 para. 3 Parliament Act, SR 171.0).
In any case, the Federal Council must submit the two credit commitments to the Federal Assembly for subsequent approval (Art. 28 para. 2 FBA).