This has enabled us to undertake extensive financial relief to businesses and households. However, just like how sand piled in dams may delay but not prevent breakage, it is inevitable that the unprecedented support will not be able to help sustain all borrowers. To be 1/3  BIS central bankers' speeches  clear, that was never the intention to begin with. As relief measures are gradually rolled back, we should expect non-performing loans (NPLs) to rise, particularly among borrowers that are unable to make successful adjustments to post-pandemic operating environment. It is therefore important for supervisory authorities to have a sound and credible exit strategy to ensure that the expected build-up of NPLs does not impair the functioning of the banking sector and hamper economic recovery. As rightly pointed out in the World Bank Report launched today, this is not an easy task. In deciding the timing and pace of roll back, policymakers all over the world need to consider the uneven recovery across sectors, as well as continued uncertainties surrounding the pandemic trajectory itself. At the same time, it is crucial to maintain support for distressed but viable borrowers to facilitate economic recovery while recognising the risk afflicting banks’ balance sheet. On the latter, it is imperative for authorities to ensure that the focus on sound credit risk management by banks does not translate to excessive risk aversion that could jeopardise the recovery process.
The statement shall comprise the first two parts of the report by the Zimmerli Expert Commission (on the creation of integrated financial market oversight and sanctions). The third part of the project (examination of expanded prudential oversight) will be dealt with at a later point in time. The Federal Council has taken various concerns of the National Bank into account. As regards the division of tasks between the supervisory board and the management board in particular, the Federal Council has moved closer to the view held by the National Bank, which believes it important that the power of disposition remains with the management board. As a non-professional body, the supervisory board is inevitably faced with conflicts of interest, which could prove an obstacle to individual dispositions. However, the experience and know-how of the supervisory board can be fully exploited with regard to the deliberation of questions of principle, budget and important staff issues. Furthermore, we support increased budgetary autonomy of the Federal Financial Market Oversight Authority (FINMA), as we are convinced that a financial centre that is as complex and significant as the Swiss financial centre requires an authority with a supervisory and management board whose powers are equal to those of the corresponding bodies of banks and insurance companies. The National Bank backs the project regarding the FINMA Act. We continue to view the integration of financial market oversight as a means to improve oversight rather than as an end in itself.