However, it is also in the big banks’ own interest to hold sufficient loss-absorbing capital, as a high level of resilience strengthens their competitiveness in the core business of wealth management, and boosts market confidence. Situation at domestically focused commercial banks I would now like to turn to our assessment of domestically focused commercial banks. There are clear and growing signs of a build-up of imbalances on the Swiss mortgage and real estate markets. Over the past 12 months, mortgage lending volumes and real estate prices have once again grown strongly. Thus, the mortgage-to-GDP ratio, which was already high in a historical comparison, continued to increase. At the same time, residential real estate prices have reached levels that, in some cases, exceed those that can be justified by fundamental factors, such as demographics or per capita income. Taking the national average, this is the case for prices of owner-occupied apartments. In some regions such as Lake Geneva, Lake Zurich and Lake Zug, this is the case, on average, for all segments of the residential property market. 2  BIS central bankers’ speeches  Under the baseline scenario, the momentum in the mortgage and real estate markets continues. It is therefore to be expected that imbalances will continue to build up, and that, consequently, the risk of an abrupt correction of these imbalances will increase over the medium term. For domestically focused commercial banks, average capitalisation relative to regulatory requirements is at a historically high level.
One of the more active SEPA communities, France, has already indicated an expected end date. This is a positive example, and other communities should follow. Should, however, banks need more preparation when they move to the new SEPA framework, the ECB and the European Commission stand ready to consider supporting measures, including regulation, if required. Let me now turn to the readiness of the industry for SEPA card payments. I will briefly present some of the ECB’s views on cards. Later today the panel will provide their views on the new cards landscape in SEPA and I am looking forward to an interesting discussion. Readiness of SEPA card payments? Card payments are closely monitored by the Eurosystem because they are now the most popular non-cash payment instrument in the euro area. According to our Blue Book statistics, more than 15 billion card payments were made in the euro area in 2006. 3 Between 2000 and 2006, we also noticed that the use of cards increased more quickly than the use of other instruments. The use of cards increased at an impressive rate of 15% per annum. The impact of any changes in the card market is significant for all stakeholders. Given that the overall cost of payments at a point of sale ranges between 0.4% and 0.65% of GDP 4 , it is clear that any development in the card market also has major implications for the economy. An increased use of cards will reduce some of the costs related to other payments, such as cash.