During the 1990s, a debate arose in the United States as to how far these exceptions could be made and whether the universal bank was to be or not to be. A number of scientific studies showed that in the trade-off that existed between benefiting from economies of scale within different types of banking activities and increasing the risks of exploiting conflicts of interest, the benefits of economies of scale weighed heaviest. For instance, it was shown that the shares and corporate bonds issued between January 1927 and September 1929 gave lower earnings if they were issued by a commercial bank than if they were issued by an investment bank. This indicated that investors required a lower risk premium if a commercial bank managed the issue than if an investment bank was responsible. The investors appear to have trusted commercial banks more, and fear of exploitation of the conflicts of interest does not appear to have dominated. The investors appear to have had most confidence in the issue when the commercial bank had outsourced its investment banking activities in a separate company. This would indicate that the investors were aware of the  BIS Review 47/2004  3  conflicts of interest, but that they considered the commercial banks’ greater capacity for certification outweighed these. In 1999 these regulations were completely removed by the introduction of the Gramm-Leach-Bliley Act.
Jean-Pierre Roth: The population is ageing - we cannot wait any longer! Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Association suisse des actuaires, Basel, 17 June 2005. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Like other developed countries, Switzerland has been hard hit by the phenomenon of demographic ageing. It is putting our old age pension scheme to a severe test. The ageing of the population is also impacting on our ability to innovate, our potential to achieve productivity gains and our competitive dynamism in a globalised and demographically diversified world. This is why measures need to be put in place quickly. At the heart of this demographic challenge lies the need to enhance the productivity of our economy as well as our productive capacity. It is all the more important to secure favourable growth conditions because the ageing of the population in itself could impact negatively upon our capacity for growth – which is under strain already now. Increasing the productivity of our economy and the pace of growth is essential if we wish to maintain our system of social security. At the macroeconomic level, the financing of old age pensions works according to a simple principle.