The high risk appetite of the domestically focused banks is, for instance, evident from the fact that mortgage lending growth at these banks continued at a robust 4%, whereas the market as a whole saw growth of around 3%. At the same time, affordability risks, which these banks take on when granting new mortgage loans to finance residential investment properties, have risen once again over the course of the year. Since many of these loans also carry considerable loan-to-value (LTV) risk, they would be particularly vulnerable in the case of a sharp increase in interest rates and a correction in real estate prices. Page 2/3  Berne, 13 December 2018 Fritz Zurbrügg  News conference  It is important that banks are in a position to bear the risks they take on. In the SNB’s opinion, this requirement is met by most domestically focused banks owing to their good capitalisation level. Capitalisation levels appropriate to the exposures incurred need to be maintained in future, too. This is particularly relevant in view of the previously mentioned granting of mortgages with high affordability risks, which increases the banks’ loss potential. Given the risks I have just described, the SNB continues to take the view that targeted measures in the area of residential investment property lending should be considered. Such measures are currently being examined. In addition, the SNB will continue to monitor developments on the mortgage and real estate markets closely, and regularly reassess the need for an adjustment of the countercyclical capital buffer. Page 3/3
), and to move over to a type of regulation based on the roles performed by different players in the stability of the system (liquidity provision, deposit-taking, market making, etc). Lastly, the G20 has set out a road map to improve accounting standards. Agreement on this point is not as broad as on the previous ones. The members of the G20 have sometimes divergent views about the role of accounting rules. In particular, one of the controversial  2  BIS Review 75/2009  points relates to mark-to-market and the scope of application of fair value accounting. Nonetheless, I observe that the G20, by asking that the accounting standard setters take greater account of financial stability constraints, implicitly acknowledges that the impact of accounting choices on the latter are not neutral. In any event, the countries agreed on three objectives: reducing the complexity of accounting standards, increasing the harmonisation of standards internationally and introducing a more forward-looking system of provisioning. The discussions at the G20 summit find a strong echo in Europe. In fact, it is no exaggeration to say that the Europeans are a driving force in the international projects I have just described. In regional terms, the report by the high level group chaired by Jacques de Larosière is a cornerstone for the new financial regulation and supervision that will emerge in Europe after the crisis. These recommendations appear highly relevant to me. They reconcile efficiency and pragmatism.