Then, since these imperfections shape the responsibilities and interventions of the regulatory and oversight authorities including central banks I shall deal with the nature of oversight. Finally I shall turn to a number of contemporary challenges that regulatory and oversight authorities face in the field of securities clearing and settlement systems. 1. The provision of clearing and settlement services by the financial system and its contribution to welfare  What is the basic role of a financial system? In my context a financial system can be understood as a set of instruments, of markets and of institutions. Following Merton and Bodie (1995) the primary role of the financial system is “to facilitate the allocation and deployment of economic resources, both across borders and time, in an uncertain environment”. In other words a financial system can be understood as the dynamic response of institutions and processes to changing imperfections such as information and transaction costs. From a practical point of view a financial system is meant to provide for the allocation of economic resources to productive investment opportunities, the trading of risks, the collecting and processing of information. Prominently this also includes the provision of clearing and settlement services. Let me concentrate on the latter, i.e. on the provision of clearing and settlement services. There is no doubt that Central Securities Depositories (CSDs), International Central Securities Depositories (ICSDs) and Central Counterparties (CCPs) are among the crucial building blocks of any wellorganised financial system.
Furthermore, if oversight activities require it, the SNB will be able to co-operate with foreign authorities. 5. Conclusion  I would like to conclude my address with a repeated call for co-operation. In the field of financial system stability there is no alternative to close co-operation between private market players like you and the regulatory and oversight authorities. On the one hand it makes sense in this field to rely on market forces to stimulate, as energetically as possible, an eagerness for progress and innovation. Institutions like CSDs, ICSDs and CCPs are made to make markets work. On the other hand we have to take into consideration that there are economic forces working in this area that may nevertheless lead to sub-optimal outcomes. Therefore, regulators and overseers must take on a more active, complementary role. First, the financial system can be affected by problems of asymmetric information, in particular in the form of moral hazard. It may also entail negative externalities, which by definition are not internalised by individually optimising market players. Specifically in the field of clearing, payment and settlement systems, where such externalities are present, regulatory and oversight authorities aim at taking into account these systems as a whole, thereby focusing on the links between all components. In other words, some of these systems are "too interlinked to fail" and must therefore be regulated and overseen with special care. Second, the financial system may be subject to limited competition.