One obvious solution was to limit shareholder liability. This, it was felt, could broaden and deepen the pockets of the investor base, freeing up bank capital and credit. The United States had been an early-adopter, with Connecticut and Massachusetts permitting limited liability from 1817. Neighbouring states had quickly followed suit. Although limited liability had existed in parts of Europe from the 17th century, it was only during the second half of the 19th century that its tentacles spread widely.4 In the UK, wholesale change came with the Limited Liability Act and Joint Stock Companies Acts of 1855 and 1856. Interestingly, banking was slow off the mark. Limited liability status was at first not taken up enthusiastically. Bankers appeared to prize unlimited liability. It served as a safety certificate  2  Cleary (1965), Collins (1988). 3  Turner (2009). 4  Hickson and Turner (2005). 2  BIS central bankers’ speeches  for depositors, a badge of prudence. “A depositor would be much more likely to trust his money with a bank whose shareholders he knew must yield up to him the uttermost farthing”. This from the lips of a banking expert of the day.5 But unlimited liability in banking remained under attack. Walter Bagehot believed its risk benefits were illusory as many shareholders did not possess so much as the “uttermost farthing”. Bagehot believed unlimited liability generated its own incentive problem: the wealthy assumed too much risk for the control they could exercise, dissuading them from investing (Bagehot (1873)).
Thomas Jordan: Strong Swiss franc and large current account surplus – a contradiction? Introductory remarks by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Swiss Institute of International Studies, Zurich, 19 February 2013. *  *  *  The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch)  For almost 18 months now, the Swiss National Bank (SNB) has been enforcing the minimum exchange rate of CHF 1.20 per euro with the utmost determination. The need for this measure is widely recognised, both domestically and abroad, due to the substantial appreciation of the Swiss franc in summer 2011. At the same time, however, there are isolated voices claiming that given the large current account surplus, the Swiss franc is too weak, and that the SNB should allow the currency to appreciate in order to contribute towards reducing global imbalances. This view is based on a lack of knowledge about the situation in Switzerland. Specific factors are responsible for the Swiss current account surplus. The balance on the trading account, for instance, makes only a modest contribution. The most important elements with regard to the current account surplus are the following: first, investment income from Switzerland's substantial net international investment position, second, financial sector earnings from business with customers abroad, which is traditionally of significance for Switzerland, and third, earnings from merchanting, which have risen sharply over the past decade. The current account surplus is also statistically overestimated.