I would like here to outline how the Swiss National Bank can help to ensure more efficient and more reliable financial market infrastructures through its oversight of payment and securities settlement systems. I would, however, like to make one key point right away: state intervention in, or regulation of, financial market infrastructures is justified only if it must be assumed that the private sector will not necessarily perform these functions of its own accord in a manner that is best for the economy. In reality, when designing a system its operators and participants will probably consider the direct costs that they would bear themselves in the event of a system failure or the withdrawal of a participant. However, the remaining costs that are not borne directly by the parties involved in the event of a system crisis tend to be forgotten in management calculations. It cannot be ruled out, then, that operators and participants take less account of the security of a system than would be necessary from the perspective of the broader economy. It is a classic problem of market failure. The sense and purpose of overseeing payment and securities settlement systems is to give due consideration to the externalities that would be neglected by the private sector and to ensure that financial market infrastructures provide the optimum degree of reliability from the point of view of the national economy.
Structures must be in place to prevent weaknesses in the financial system, such as payment or delivery difficulties on the part of a system participant, spreading in an uncontrolled fashion to other participants. In this context, the focus is, for example, on requirements relating to the payment instruments used, the irrevocability of transactions that have already been settled (finality), and on instruments and procedures to limit credit and liquidity risks. 2  BIS Review 58/2003  Collaboration with other authorities The National Bank is not the only institution which actively endeavours to secure the stability of the financial system. There is also contact with other authorities. One of these points of contact arises from the fact that, for example, the operator of SECOM (SIS Sega Intersettle AG) holds a bank licence and is therefore subject to supervision by the FBC. The FBC will still be the regulatory body responsible for the institution itself, while the National Bank will handle the oversight of the system operated by this institution. A parallel situation exists in the case of x-clear, which is operated by SIS x-clear AG - also regulated, as a bank, by the FBC. The FBC and the National Bank coordinate their activities and avoid overlaps. A further point of contact with other authorities exists in the case of financial market infrastructures that are of systemic importance to Switzerland but are operated abroad and thus cannot be overseen directly by the National Bank.