Marc Chesney, head of department of banking and finance at Zurich University, warned about a coming blowout of the financial system and called for re-introduction of bank separation (Glass-Steagall). Chesney was interviewed on April 3 by the Swiss daily Tagesanzeiger on the Credit Suisse crisis. Professor Chesney is a frequent speaker at events organized by Impulswelle, friends of the Schiller Institute in Switzerland.
Credit Suisse’s current troubles are “a new episode of the permanent crisis of the financial gambling casino. There are more and less acute phases and then, such episodes occur as if out of nothing. It is very opaque but we, the citizens, should know what is going on. Credit Suisse is systemically relevant, and therefore it has a responsibility towards the taxpayer.
“The mixture of high debt and derivatives is the recipe for acute crises; it was so in 2008, and it is still the case, regularly.”
The bank’s justification for derivative contracts as insurance against risk “is a bad joke. The nominal value of derivatives in Switzerland was 26,000 times the GDP last autumn. How can one believe that bank customers in Switzerland must cover risks for 26,000 times the national output?”
