9 It is therefore important that supervision and regulation keep up with and are adapted to developments and structural changes that occur in the financial sector. Central banks may also from time to time review their guidelines and arrangements for liquidity assistance so that they are sufficiently flexible in order to meet new requirements. There may, for example, be reason to consider the forms in which types of companies other than banks might also be eligible for liquidity support. One such type of player is so-called central counterparties. A central counterparty (CCP) acts as a counterparty to the buyer and seller in a security transaction, thereby assuming all counterparty risk. In order to reduce systemic risks globally, authorities around the world have encouraged the use of central counterparties in transactions with standardised OTC derivatives – such as interest rate swaps. The idea is that this will increase resilience in the  8  An LCR amounting to 100 per cent means that the banks have assets that can be quickly and safely used for payments – in order to cover their cash outflows during a 30-day-long stress scenario. 9  For an early study of the emergence of the unregulated credit market, see Ingves (1982). BIS central bankers’ speeches  5  financial system in the event of a bank failing.
But even for exports of processed metal goods and machinery does Switzerland have higher export unit values than, for instance, the EU. 15  Looking at developments over the last 20 years, it is primarily the prices of watch exports that have risen considerably. 16  Ireland also exports a lot of chemical and pharmaceutical products. Besides, the unit values of its exports of electronic products are also very high. 6  BIS Review 157/2010  Chart 3  Source: Eurostat. Overall, the results from a unit value analysis support the assessment that Switzerland is specialised in the production of high quality products. This is in line with previous studies. These show that Swiss export products largely compete on quality, rather than on price. 17 Given the level of know-how in Switzerland, this ought to be the case in the future as well, assuming that Swiss products can continue to fulfil the ever-growing demands on quality. To what extent could this have had a positive influence on the way in which exports developed in the most recent crisis? For the short term, at least, it can be assumed that higher quality products are more difficult to substitute than relatively homogenous goods. This applies not only to pharmaceuticals, but also to highly specialised products such as precision instruments. And this was indeed the case during the most recent crisis – Swiss exports of precision instruments receded only slightly, and have since risen to such an extent that they now already exceed their pre-crisis level.