Moreover, most of these banks’ capital is of the highest quality, and thus loss-absorbing. However, in the current environment, the resilience of these banks, as measured by the regulatory capital indicators, is overestimated.   First, certain risks are not captured by the regulatory requirements. This applies, in particular, to interest rate risk in the banking book, which covers traditional deposit and lending activities. In the current situation, with historically high interest rate risk exposures, this is a significant shortcoming.   Second, the current capital requirements have a procyclical effect. Thus rising real estate prices, by causing loan-to-value ratios to fall, can lead to lower capital requirements. Given the growing imbalances on the real estate market, banks’ resilience, as measured by the regulatory capital indicators, is overestimated.   Third, the low level of diversification of most domestically focused commercial banks is not taken into account in capital requirements. The main focus of these banks’ business activities, and their risk exposures, relate to mortgage lending. This concentration of activities is compounded by a geographical concentration at the cantonal or regional level. In the light of these factors, the SNB considers that action is needed on two fronts: First, the capacity of some banks to bear the risks incurred must be reviewed, and strengthened if necessary. This applies particularly to banks which have cumulative risks, such as high interest rate risk and high exposure to the mortgage and real estate markets. FINMA’s microprudential measures will play a key role in this regard.
In the 1990s he was Head of the Treasury and Chief of Staff for the Ministers of Finance Edmond Alphandéry and Jean Arthuis. During those years he built up considerable European and international experience. He was a member of the European Monetary Committee and held the office of alternate for the Minister of Finance at the OECD, the G7 and the G10. As Head of the Treasury, he also chaired the Paris Club. In 1998 he was appointed Vice-President of the newly established European Central Bank. In 2003 he succeeded Jean-Claude Trichet as Governor of the Banque de France, a post that he still holds following his reappointment in October 2009. He is a member of the Governing Council of the European Central Bank and Chairman, since 2010, of the Baselbased Bank for International Settlements. He is also head of the Prudential Control Authority, one of the two most important regulation and supervision bodies in France. Today, Christian Noyer is one of the most respected and long-serving central bankers. He has extensive experience in monetary policy management, and in banking and financial regulation and supervision. He has been at the forefront of efforts to address and resolve the financial crisis that began in 2007 and the subsequent European sovereign debt crisis. As well as for his profound knowledge of monetary and financial matters, Governor Noyer is known for the extremely courteous and careful way in which he always expresses his opinions and even his most serious disagreements.