Philipp Hildebrand: Key factors for the Swiss economy – financial market regulation in Switzerland Speech by Mr Philipp Hildebrand, Chairman of the Governing Board of the Swiss National Bank, Swiss Economic Forum, Interlaken, 4 June 2010. The complete speech can be found in German on the Swiss National Bank’s website. *  *  *  The financial system is the life blood of our economy. Key measures to increase the resilience of the financial system have already been implemented in Switzerland. However, they have not addressed the fundamental problem, which is that systemically important banks cannot at present be allowed to fail. The commission of experts set up by the government to examine ways of alleviating this problem published its interim report a few weeks ago. The report proposes measures in the areas of capital, liquidity and organisational structure. This approach is in line with the key points on the Financial Stability Board’s agenda. The interim report is an important milestone in the efforts to address the “too big to fail” issue. Naturally, we still face considerable challenges. Moreover, cross-border solutions are required for the “too big to fail” question. The commission’s proposals represent a constructive step towards global cooperation. If the key points on the Financial Stability Board’s agenda are not implemented in the major financial centres, we will ultimately be left empty handed. One of the few positive aspects of the financial crisis has been the unprecedented international collaboration to combat the crisis and the endeavours to cooperate internationally on regulatory reform.
In the meantime, I am pleased to note that the first RMB equity securities have been listed on the Hong Kong Stock Exchange. •  Third, there will also be a need to enhance the price discovery process and related market infrastructure for RMB transactions. This will mean introducing the necessary benchmarks for RMB transactions in the offshore market, including an exchange rate fixing, interest rate fixing and various kinds of benchmarks for RMB investments. The Treasury Markets Association introduced spot USD/CNH fixing in June 2011, and they recently announced the June 2013 launch of CNH HIBOR fixing. This welcome development will provide a reliable benchmark to price loan facilities and facilitate the development of the offshore RMB interest rate swap market. Global hubs and linkages The fourth and final characteristic – the presence of a network of global hubs and linkages – is especially apt for all of us in this room today as we consider Hong Kong’s role in the nascent offshore RMB market. The Eurodollar market, which originated in London, is made up of different hubs connected by extensive links. London remains a major centre, while other hubs serve other time zones and networks, and together they form an integrated whole through the free flow of funds. In 2004, Hong Kong was the first offshore market to launch RMB business, and since then it has provided an efficient and reliable settlement platform from which trade settlement is conducted, RMB liquidity built up, financing activities arranged and a wide range of RMB products developed.