BERN (Reuters) – Swiss National Bank (SNB) Chairman Thomas Jordan on Wednesday defended the central bank’s handling of the Credit Suisse crisis including handing out emergency cash to the stricken lender contrary to its normal rules.

The SNB bought time for a solution by providing massive liquidity for Credit Suisse before UBS bought the bank in March, Jordan told an event in Bern.

The acquisition of the fallen 167-year-old lender prevented a global financial crisis, he said.

“The SNB’s willingness and ability to provide liquidity was crucial in managing the acute crisis at Credit Suisse and thus in avoiding a financial crisis with serious economic consequences for Switzerland and the rest of the world,” Jordan said.

The SNB provided 168 billion Swiss francs ($185 billion) in emergency liquidity after Credit Suisse suffered massive outflows as rattled customers withdrew their funds in March.

“Never before had a central bank provided such a large amount of liquidity to a single bank,” Jordan told the SNB and its Watchers event.

Some of the cash was provided via an emergency scheme called ELA+, or emergency liquidity assistance.

The money was secured only via preferential rights in bankruptcy proceedings and not against collateral like mortgages which is usually demanded by the SNB.

“Without ELA+ Credit Suisse would have been in jeopardy of being unable to meet its financial obligations … entailing substantial risks for financial stability,” Jordan said.

But while the SNB played a key role in resolving the situation, there were limits to what the central bank could do and important lessons to be learned, he said.

Liquidity regulations must be adapted in the light of faster and larger outflow of customer deposits, Jordan said.

It was also crucial for banks to prepare sufficient collateral to transfer to central banks to obtain emergency liquidity in a crisis.

There also needed to be an effective public liquidity backstop to enable the SNB to provide liquidity to lenders that do not have sufficient collateral and which was covered by a state guarantee.

“ELA+ should not become part of the SNB’s regular set of instruments,” Jordan said.

(Reporting by John Revill; Editing by Mark Potter)

FILE PHOTO: Swiss National Bank Chairman Thomas Jordan attends the shareholders meeting of SNB in Bern, Switzerland, April 28, 2023. REUTERS/Denis Balibouse