The political response to the Credit Suisse collapse is increasingly focused on tightening capital requirements for systemically important banks. The objective is clear: to prevent a similar crisis in the future. However, a narrow focus on higher capital buffers alone risks missing the core issue.
Trust, Not Capital, Is the Decisive Factor
The Credit Suisse collapse was not primarily the result of insufficient capitalisation. Rather, it stemmed from years of strategic missteps, weak risk management and a profound loss of trust among clients and markets. Even adequate regulatory capital ratios proved insufficient once confidence eroded and deposits began to flow out. Banks rarely fail because of a lack of capital. They fail because of a loss of trust.
