Swiss government plans for tougher capital standards for big Swiss banks would help reduce the chance of another crisis, the Swiss central banks' vice chairman wrote on Sunday in a newspaper.

The Swiss government on last month started the legal process of tightening regulation on UBS and rival Credit Suisse by proposing they hold more capital and meet more stringent liquidity requirements.

Banks and industry groups have until March 23 to comment on the proposals before parliament begins discussions in its summer session. The legal amendments could come into force at the start of 2012 at the earliest.

If the proposal is approved, it will very much reduce the 'too-big-to-fail problem in Switzerland, as well as the risk and the costs of a crisis for the Swiss economy, Vice Chairman Thomas Jordan wrote in the newspaper Der Sonntag.

Since bailing out flagship bank UBS during the financial crisis, Switzerland has been at the forefront of a global push to increase oversight of big banks, which has led to the new Basel III rules that require banks to hold more capital to shield them in the event of a crisis.

Jordan was part of a commission of experts that earlier this year presented to the government a plan for lessening the chance of future bank failures. The government's changes are based on the commission's report.

(Reporting by Catherine Bosley; Editing by Erica Billingham)

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