The Fall of Credit Suisse

     Those of us in America have most likely already heard about the collapse of SVB bank, but this was not the only financial institution who hit a roadblock, as the global investment bank Credit Suisse also ran into hard times. Unlike SVB, Credit Suisse is still operating, but only after massive help from the Swedish central bank, and after being bought out by UBS Group AG (another large bank based in Sweden). In the end, over 15 billion dollars in bonds will be defaulted on. While the cause of this financial trouble is not 100% known, this article takes the controversial view of placing the blame on government regulations, specifically a drastic increase in the money supply and the adoption of low interest rates (sometimes even negative) for too long of a period. As the article states, the central banks set the stage "for a collapse by creating untenable economic conditions in the form of an artificial boom fueled by a drastic increase in the money supply," combined with, "The SNB’s [Swiss National Bank] near-fifteen-year suppression of interest rates," leading to, "all kinds of financial absurdities, such as negative-yielding 50-year government bonds, 0 percent unsecured corporate bonds, and near–0 percent mortgages." These policies, "have resulted in Swiss markets pricing themselves upon the lowest rates seen in five thousand years." The house of cards starting to collapse in the second quarter of 2022 when Sweden started to see a rise in their CPI, causing them to finally raise their interest rates and trim their balance sheet. Now, less than a year later, "with interest rates having barely risen above 0 percent from the previous negative percent rates, economic growth is pointing toward imminent recession, and the country’s second largest bank just required a central bank–sponsored rescue." Unfortuanatley, the author also doesn't see this as a one-off issue, stating that, "The dissolution of Credit Suisse is far from the end of this business cycle’s financial crisis, as negative interest rate policies were not unique to Switzerland, having been implemented across Europe and in Japan. Other 'too big to fail' megabanks will likely face the same fate as Credit Suisse, pushing central banks to intervene in order to provide just enough moral hazard to ignite another artificial boom." 

https://mises.org/wire/credit-suisse-collapsed-because-government-intervention-not-despite-it