First, the financial crisis has shown that a large, highly developed and internationally integrated banking industry means risks as well as growth opportunities. In particular, the crisis clearly demonstrated that some individual banks are so important for the economy that they have to be rescued by the state in the event of a crisis. This is the “too big to fail” (TBTF) issue. Because of the de facto state guarantee associated with the TBTF issue, the borrowing costs of these kinds of bank are implicitly subsidised. As a result, competition is distorted in favour of these banks. In particular, however, the implicit state guarantee creates incentives to take on excessive risk. In Switzerland, this problem was particularly acute before the financial crisis. As is well known, the global expansion and exposure of the big banks in the area of investment banking meant that, in autumn 2008, UBS found itself in a precarious situation. Since UBS was an integral pillar of the domestic loan and deposit market, the Swiss economy would have suffered enormous damage if the bank had collapsed. With the transfer of illiquid assets amounting to almost USD 40 billion to the stabilisation fund of the Swiss National Bank (SNB) and the subscription to mandatory convertible notes by the Confederation, UBS was stabilised and this danger was averted. Luckily we are now able to say that the endeavour was ultimately brought to a successful conclusion – even earning a profit for the Confederation and the SNB.
In terms of the usual indicators of the financial development of a country – such as the size of the financial sector or access to financial services – Switzerland has one of the most advanced  1  Cf. Levine 2005. BIS central bankers’ speeches  1  financial systems in the world.2 At the same time, the economic importance of the banking industry in this country is above average. It generates an annual gross value added of some 6% of GDP and currently employs about 150,000 people. In addition, at least in the years before the financial crisis, the industry made a significant contribution to overall economic growth.3 When banks are familiar with the local conditions and are also able to integrate knowledge concerning Swiss macroeconomic conditions into their business decisions, this enables them to provide particularly efficient services to the Swiss economy. It is therefore advantageous for our country to have locally established banks which make their decisions here in Switzerland. It is not only with services which benefit companies and households located in Switzerland that the Swiss banking industry creates value added. As we all know, the industry is also very active in the international arena – on the one hand, via exports,4 that is, through the cross- border provision of financial services from Switzerland, and on the other, through its actual presence abroad. In this respect, the most important source of income is the crossborder wealth management business for private customers.