Such measures would also boost confidence in the modelbased approach. Second, it must be ensured that, if necessary, there can be an orderly resolution of a big bank in the event of a crisis. From the Swiss perspective, the emergency plans on maintaining systemically important functions are particularly important in this regard. The emergency plans must be credible and workable in a crisis. For this reason, the big banks should continue to push forward consistently with their emergency plans. Moreover, global  BIS central bankers’ speeches  1  resolution plans must ensure that the non-systemically important units of a big bank can be resolved in an orderly fashion. Adjustments to the group structure, as recently announced by both big banks, represent a first step in this process. An additional tool which can facilitate global resolution is based on the bail-in concept, which is the subject of widespread discussion at international level. With a bail-in, debt can be converted to equity capital, which would enable the big banks to carry additional losses in the event of a crisis. However, the effectiveness of a bail-in essentially depends on whether appropriate debt is available in sufficient quantities, and whether its characteristics are such as to ensure a smooth conversion into equity capital in the event of a crisis. In this regard, the authorities will have to examine the extent to which it is necessary to expand the existing TBTF regulations to take account of Swiss specificities.
Similarly, the level of unit labour costs is lower in Malta than in both the weaker and stronger groups, as will be discussed later. It is important that the public debate and the formulation of policy focus more closely on what is needed for Malta to remain aligned with the better performers. In the first two quarters of 2013, Malta’s GDP growth rate stood at 2.7%. Net exports have been the main source of expansion. The outlook is for stronger growth in 2014 as Malta continues to benefit from its competitiveness. The economy continues to diversify, creating high value added job opportunities. While some sectors have had to downsize, there has been a compensating expansion in other sectors, such as financial and other services. This is shown in Chart 4. An aspect that may go unnoticed is the role of the financial sector in the resilience of the Maltese economy and its alignment with the stronger group of countries. Financial soundness indicators confirm that Malta has a sound and robust banking sector. A three-way split of the banking sector distinguishes between the core domestic banks that are closely integrated with the domestic economy at one end and the international banks that conduct all  2  BIS central bankers’ speeches  their business abroad at the other end, along with a relatively small sector, the non-core domestic banks, in between, as shown in Chart 5.