The mandates of central banks are changing, as they are strengthening their macro-prudential powers and embracing more explicitly the objective of financial stability. Some major central banks have for the first time assumed the direct supervision of credit institutions. Thus, this period of changes is going to be a landmark in the history of central banking. The current overhaul of banking regulations globally is also fundamental by nature. The scale of reforms in the regulatory framework for the banking industry, after the collapse of Lehman Brothers and the outbreak of the euro area sovereign debt crisis, could be compared only with the major reforms undertaken in the aftermath of the Great Depression in the 1930s. The sheer magnitude of this changeover, however, does not guarantee the elimination, once and for all, of the regulatory gaps and loopholes for the risk taking activities of banks. Moreover, while the wide-ranging changes in banking regulation certainly improve banks’ capital, liquidity, operations and governance, they are sometimes feared to have a discouraging effect on banks’ lending and other services in the public interest. What caused the recent wave of banking reforms, what issues regulators still need to consider, and how are banks expected to respond on a global or national level?
In the emerging economies, performance remained uneven, while growth continued to cool in China. The global economy is expected to gather pace again, reinforced by expansionary monetary policy around the world and ongoing low oil prices. For instance, after a disappointing first  BIS central bankers’ speeches  1  quarter, the two large economies, the US and China, are starting to show signs of improvement. Nonetheless, uncertainty about the future development of the global economy remains high. Various risks – first and foremost the difficult financial situation in Greece and geopolitical tensions – could jeopardise the recovery. Swiss economic outlook According to initial estimates, Switzerland’s real GDP declined slightly in the first quarter. As expected, goods exports suffered from the strong Swiss franc appreciation, but also from a downturn in global trade. Domestic demand, by contrast, developed robustly. Having said this, the situation varies considerably from one industry to another. Profit margins are under significant pressure in several sectors, and this is forcing companies to take steps to reduce production costs and raise efficiency. Against this backdrop, unemployment has increased slightly on a seasonally adjusted basis. Over the coming months, the global economic recovery is likely to lead to a gradual upturn in demand for Swiss products; this will cushion the impact of the exchange rate shock somewhat. As the global economy gathers momentum, we expect Switzerland to return to positive growth in the second half of the year. The SNB continues to anticipate growth of just under 1% for 2015 as a whole.