spiral, in which it finds it much harder to undertake its banking activities.
“That could raise questions about other banks at a time when there are also banking concerns in the United States.”
Mr El-Erian said the current turmoil could lead to banks becoming more “risk averse”, leading to a fall in credit availability.
But that amounted to a “headwind” for the global economy, rather than something like the sudden stop experienced during the 2008 financial crisis, which was “in a completely different league” to today’s problems, he said.
UBS is said to have asked the Swiss government to cover about $6bn (£4.9bn) in costs if it were to buy Credit Suisse, according to sources quoted by Reuters.
Credit Suisse reported a loss of 7.3bn Swiss francs ($7.9bn; £6.5bn) in 2022 – its worst year since the financial crisis of 2008 – and has warned it does not expect to be profitable until 2024.
UBS, however, made a profit of $7.6bn in 2022.
Any deal may also result in significant job losses.
As well as being a domestic bank with 95 branches, Credit Suisse has a global investment banking operation and manages the assets of rich clients.
At the end of last year Credit Suisse had a global staff of 50,480, including 16,700 in Switzerland, though 9,000 jobs were to be axed, the Swiss broadcaster SRF reports.
