In any case, whatever the financial  2  BIS Review 48/2009  outcome, it must be borne in mind that the only motive behind our intervention was to keep the uncertainty with regard to the value of UBS’s illiquid assets from destabilising the bank and thereby our financial system and economy. When public funds are employed to restore financial stability, the rules governing the functioning of markets need to be adapted to ensure that such a situation can never arise again. We therefore strongly supported the SFBC’s stance in favour of a gradual strengthening of the big banks’ capital levels, of capping their leverage ratios and reforming their compensation systems. In addition, the SNB is currently working together with FINMA to impose more stringent liquidity requirements. As I already pointed out last year, a small country like ours is entitled to define specific conditions under which the systemic risks involved with having two large international banks domiciled on its territory must be limited. The Federal Council and the SFBC clearly recognised this situation and took appropriate preventive measures. For the future, it would also be advisable to examine the expediency of putting into place a legal framework and organisational measures that permit an orderly liquidation of systemically important banks. The crisis spreads to the real economy Ultimately, it was inevitable that the financial market crisis would spread to the real economy. And yet the year 2008 began well.
The SNB reacted swiftly to the deteriorating economic situation, and many people hoped that the monetary policy adopted could shield our country from the turmoil experienced elsewhere. However, it was not in our power to meet these expectations. We did all we could within the framework of our legal mandate. 2009 will be a difficult year for our economy, and the signs are that 2010 will be so too because, even if the downward trend is halted, the under-utilisation of our production resources will still be considerable. Dear Shareholders Dear Guests In such a challenging environment, we shall once again need the support of everyone, in particular our shareholders. We thank you for the unfailing trust you placed in us throughout the year and the interest you have shown in the SNB’s activities. BIS Review 48/2009  5