At the presentation of the last report on financial stability, we expressed our conviction that the financial system needs to be made more resilient to possible shocks. This is all the more valid if we consider the hundreds of billions of taxpayers’ money that had to be spent worldwide on stabilising the financial system over the past few months. The focus is on the need for improvement in the “shock absorbers”: capital and liquidity. The crisis has shown that the current regulation in these areas is no longer sufficient in the case of the big banks. Their level of capital is inadequate when set in relation to their risks. In the area of liquidity, events have occurred that were not taken into account in any of the big banks’ scenarios. The reform of the capital adequacy regulation for big banks, drawn up by the SFBC with the support of the SNB, represents an important step in the right direction – for the area of capital. It specifies an increase in risk-weighted capital together with the introduction of a leverage ratio. The leverage ratio is a supplementary instrument and does not call into question the principle of risk-sensitivity with regard to the capital regulation. An essential constituent of the reform are countercyclical mechanisms whereby, in good times, banks are required to considerably exceed the minimum requirements for capital and the leverage ratio. This ensures that a buffer is created to absorb losses during crises.
Philipp Hildebrand: Current state of the Swiss financial system and lessons learnt Introductory remarks by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the end-of-year media news conference, Zurich, 11 December 2008. *  *  *  When we published our report on financial stability six months ago, I talked to you about the most important lessons that the SNB had learned from the financial crisis. Today, after a brief assessment of the current state of the financial system, I would like to tell you about progress in the follow-up from these lessons. The focus here is on capital and liquidity regulation. Finally, I will speak briefly about a more cheerful topic that is unrelated to the financial crisis – the launching of a new series of Swiss banknotes. The economic environment has sharply deteriorated ... As you have already heard from Mr Roth, the economic environment has sharply deteriorated. The three big economic blocs – Europe, Japan and the US – are in recession, and growth in the emerging economies has slowed markedly. For Switzerland, we also expect a period of negative growth. The situation on the US real estate market has not yet stabilised. Futures on the Case-Shiller index indicate a further drop in prices of around 15% until 2010. Thereafter, the contracts suggest that prices will stabilise. Falling prices can also be observed in some European countries, in particular in the English and the Irish real estate markets.