The European Banking System Is in Much Better Shape to Weather the Stress of the Credit Crunch

European banks have underperformed US banks since the credit crunch, largely driven by this additional regulatory burden that they face. Europe spent a decade toughening up banking regulation because it went through a rolling multi-year euro crisis. European regulators have a detailed set of standards for testing interest rate risk with the idea that they'll be applied to every significant bank in Europe. Unrealized losses are not ignored under this regime and the global basal standards on stable funding are applied across the entire banking sector. With the Swiss National Bank backing Credit Suisse and with its balance sheet in decent order, it seems highly unlikely that liquidity issues will sink the ship.