GENEVA — In an effort to prevent further market-shaking turmoil in the global banking system, banking giant UBS is purchasing troubled rival Credit Suisse for almost $3.25 billion.

After a plan for Credit Suisse to borrow up to 50 billion francs ($54 billion) failed to reassure investors and the bank's clients, Swiss authorities pushed for UBS to acquire its smaller rival. This week saw a sharp decline in the value of shares of Credit Suisse and other banks after the failure of two U.S. banks raised concerns about other potentially unstable institutions in the global financial system.

Authorities are concerned about the repercussions if Credit Suisse fails because it is one of the 30 financial institutions considered globally systemically important banks.

Alain Berset, the president of Switzerland, described the deal as "one of great breadth for the stability of international finance" when he made the announcement on Sunday evening. "The country and the global financial system would suffer immeasurable consequences from an unchecked collapse of Credit Suisse."

The emergency ordinance allowing the merger to proceed without shareholder approval was passed by Switzerland's executive branch, a seven-member governing body that includes Berset.

Axel Lehmann, chairman of Credit Suisse, described the sale as "a clear turning point."

Lehmann said, "It is a historic, sad, and very challenging day for Credit Suisse, Switzerland, and the international financial markets. The focus is now on the future, and in particular, on the 50,000 employees of Credit Suisse, of whom 17,000 work in Switzerland.

The coordinated financial actions to stabilize banks in the upcoming week were announced by central banks around the world. For example, banks have daily access to a lending facility where they can borrow dollars if they need to, just like they did during the 2008 financial crisis. The UBS chairman, Colm Kelleher, praised the "enormous opportunities" that result from the acquisition and emphasized his bank's "conservative risk culture." The combined group would establish a wealth manager with invested assets totaling more than $5 trillion.

The merger of Credit Suisse and UBS, the two largest and most well-known Swiss banks, is a significant improvement for Switzerland's standing as a major international financial hub. The deal comes after the failure of two sizable U.S. banks last week, and since Credit Suisse's stock price started falling this week, the world's financial markets have been on edge. Christine Lagarde, president of the European Central Bank, praised Switzerland's officials for their "swift action," calling it "instrumental for restoring orderly market conditions and ensuring financial stability." Because of more stringent government regulation, she claimed, the banks are in a different situation than in 2008.

In the upcoming months and years, UBS officials intend to sell off a portion of Credit Suisse or reduce the size of the bank. The Swiss government is backing the deal with more than 100 billion francs in aid and financial guarantees. As part of the agreement, Credit Suisse bonds worth 16 billion francs ($17.3 billion) will be wiped out if the bank's capital falls below a predetermined level. Due to growing worries about Credit Suisse's financial stability, the Federal Council has been debating the situation there since the beginning of the year and has held urgent meetings over the past four days.

The Credit Suisse transaction, which could harm Switzerland's reputation as a leading financial center, is still being digested by investors and banking industry analysts. The Financial Stability Board has classified Credit Suisse as one of the most significant banks in the world, which means that if it were to fail suddenly, the entire financial system would be affected. Although the parent bank of Credit Suisse is not subject to European Union supervision, some of its subsidiaries in various European nations are. Lagarde emphasized once more how resilient the European banking industry is, with strong financial reserves and an abundance of available cash.

The issues with Credit Suisse are distinct and do not relate to the flaws that led to the failure of Silicon Valley Bank and Signature Bank and necessitated a rescue effort by the Federal Reserve and the Federal Deposit Insurance Corporation. The agreement brings to an end a week that saw extreme volatility for Credit Suisse, which saw its shares crash to a record low after its biggest shareholder, the Saudi National Bank, announced it would stop investing in the bank to avoid breaking regulations. Shares on the Swiss exchange fell 8% on Friday to close at 1.86 francs ($2). Credit Suisse reported on Tuesday that managers had found "material weaknesses" in the bank's internal controls over financial reporting as of the end of the previous year, which is when the current problems started.