Jean-Pierre Danthine: The strong franc and the future of Switzerland’s financial market infrastructure – two current challenges for the Swiss National Bank Speech by Mr Jean-Pierre Danthine, Member of the Governing Board of the Swiss National Bank, at a Money Market Event, Geneva, 3 November 2011. *  *  *  The speaker would like to thank Marlene Amstad, Anna Faber, Peter Kuster, Angelo Ranaldo, Andy Sturm, Dominik Salierno and Andreas Wehrli for their valuable support in drafting this speech and preparing this presentation. Introduction In today’s global economy, central banks face no shortage of challenges. Of the many issues we confront, I will discuss two that are currently of particular relevance to the Swiss National Bank (SNB). The strength of the Swiss franc is on everyone’s mind. This summer it became a predicament of unprecedented dimensions and it continues to put tremendous pressure on the Swiss economy. I will address this topic in the second part of my speech. By contrast, the challenge I will discuss first – the future of Switzerland’s financial market infrastructure (FMI) – is not making headlines at present. Essentially, the term FMI encompasses the exchanges, central counterparties, settlement systems, central securities depositories and other service providers which support the financial system. This infrastructure is central to the functioning of financial markets. It is crucial for the implementation of monetary policy and participants’ access to central bank liquidity. As long as the FMI functions smoothly, it rarely attracts public attention.
However, that would then require a change  1  Conclusions of the Presidency, European Council in Copenhagen, http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/72921.pdf. 2  See the Opinion of Advocate General Cruz Villalón on Case C-62/14, Peter Gauweiler, et al. and Fraktion DIE LINKE im Deutschen Bundestag v Deutscher Bundestag (Request for a preliminary ruling from the Bundesverfassungsgericht (Germany)) delivered on 14 January 2015, paragraph 38 ff. BIS central bankers’ speeches  21–22  June  1993,  1  to the European treaties. There is no provision for a transfer union in the current Treaty. And whether you like it or not, that applies to the front door as well as the back door. This is something which those who call for more (financial) solidarity must realise. More solidarity within Europe in this sense would also require more European control. But we don’t yet have a “euro area parliament” with the democratic legitimation for this, or a supranational budget worthy of this name. At the moment I see correspondingly little willingness from national parliaments to relinquish their budgetary powers in order to centralise them at the European level. The flipside of this coin, however, is that Member States, with their own national budgets, have disproportionately more individual responsibility. Even without financial transfers, there must be reasons why it is more attractive for Member States to be part of the Monetary Union than to stay outside it. In addition, they must be better off in the euro area than out.