The recent litigation in New York involving claims under surety bonds is perhaps a much reported incident of this sort. And uncertainties in a world dependent on expeditious performance of contracts has to be a real issue in financial stability terms. Second, we have seen the emergence of large multifunctional financial groups. So my observation is that whatever thinking might have gone into the Basel II Accord for banks, we would be wise to focus further, on the way in which capital adequacy and other prudential supervisory techniques fit together, for different parts of the financial world, including insurance. The wisdom in earlier days was that systemic risk, in a financial stability sense, was largely confined to banks. Not any more. It has been recognised for some time that the securities arena and the process of securitisation has changed all that. And more recently, growing interlinkages with the insurance sector are giving rise to the need for a further rethink. II  Looking beyond capital adequacy: the importance of liquidity  Secondly a rather different angle. Viewed from the point of view of financial stability, capital adequacy is clearly a vital and valuable policy tool. That is why Basel II is so important. But systemic crises do not always emanate from capital inadequacy. The first indication of trouble ahead may well come from a completely different area. What I am talking about is the question of liquidity.
Niklaus Blattner: System stability and security of the systems Summary of a speech by Prof Dr Niklaus Blattner, Vice-Chairman the Governing Board of the Swiss National Bank, at the Luzerner Tage für Informationssicherung (LUTIS, conference on information security), Lucerne, 25 May 2004. The references for the speech can be found on the Swiss National Bank’s website. *  *  *  The stability of the banking system and the security of the financial market infrastructure - including the stock exchanges and especially payment and securities settlement systems - have become an important concern of central banks all over the world in recent years. This has notably happened against the background of the numerous financial crises witnessed during the past decades. Moreover, events such as 9/11 have heightened awareness for the security of the financial markets and other infrastructures. In Switzerland, the growing importance of system stability has also been reflected in the new National Bank Act, which entered into force on 1 May 2004. Within the framework of its principal mandate of pursuing a monetary policy in the interests of the country as a whole while at the same time ensuring price stability, the Swiss National Bank (SNB) is legally obliged to make a contribution to system stability and to facilitate and secure the operation of cashless payment systems. In implementing its mandate, the SNB takes preventive measures as well as measures aimed at overcoming crises. For instance, in a crisis the National Bank plays an important role in providing liquidity.