Allow me to point out that the tightening of capital regulations and the introduction of a leverage ratio that occurred at the end of 2008 were not aimed at reducing the systemic importance of the big banks to an acceptable level. These measures were much more a response to regulatory shortcomings revealed by the recent crisis, which were insufficiently conservative backing of risk with capital (particularly in the trading book) and the lack of a countercyclical component in capital requirements. As regards more stringent liquidity requirements for systemically important banks, specific measures have already been implemented. The liquidity requirements have been thoroughly revised by FINMA and the SNB in collaboration with the big banks, and will come into effect at the end of this month. The final key measure, which is aimed at organisational structure, is also important. The organisation and legal structure of systemically important banks must be adapted to ensure  BIS Review 85/2010  3  that an orderly liquidation is possible should it become necessary. In particular, it must be possible for systemically important functions to be maintained without the bank as a whole having to be rescued. Clearly, this is not easy to achieve. The implementation of this measure must take into account the challenges posed by the considerable complexity and cross-border activities of the big banks. It must be credible and robust – both operationally and legally. An unworkable approach in this area could have fatal consequences in the next crisis.
It is the commission’s assessment that in their current form and size, the big banks are clearly systemically important. The commission of experts published its interim report at the end of April. The “too big to fail” issue is to be addressed through a package of key measures encompassing special requirements for systemically important banks in the areas of capital, liquidity and organisational structure. These key measures are compatible with the approach discussed by the Financial Stability Board. Besides those proposed by the commission of experts, other measures being considered at the international level include the breaking-up of big banks, the prohibition of certain activities such as proprietary trading, and the taxation of balance sheets and transactions. The SNB fully supports the proposals put forward by the commission of experts to date. The overall direction is correct. What is important now are the details of the measures. Our position is clear. It is essential that capital requirements be significantly increased and that they rise in line with the degree of systemic importance of a bank. This is the only way to ensure that the banks internalise the risks which, until now, they have been able to pass on to the general public, to some extent. Moreover, progressive capital requirements should create an incentive for banks to reduce their systemic importance, with its associated risk potential.