This residual risk can be eliminated by euro adoption, and fasttrack entry into euro area thus seems to be an optimal exit strategy from the current regime. In the case of countries with floating exchange rates, on the other hand, the direct exchange rate risk may be  2  BIS Review 8/2004  much smaller. The debate may therefore pay more attention to preconditions that should be met before entry to minimise the risks of excessive credit booms with undesirable consequences. Let me conclude by saying that central bankers in acceding economies should focus on two issues in the period ahead. We should aim to meet the nominal convergence criteria in a sustainable manner and we should also provide good guidance in the area of financial stability. And we certainly need much more discussion to find ways in which central banks, fiscal authorities and financial system regulators can foster financial stability in the monetary union. The balance of risks will depend very much on the particular legal and regulatory framework of each economy and the quality of corporate governance in financial institutions. The risks could become serious only if the inflow of external funds were to be intermediated by a weak domestic financial sector. Further improvements in the legal and regulatory framework are thus very important. We must also strengthen our capacities in macroprudential analysis, as early identification can help prevent financial vulnerabilities from building up further.
News conference  Berne, 14 December 2017 Fritz Zurbrügg  Introductory remarks by Fritz Zurbrügg  In my remarks today, I would like to address some of the developments currently taking place in the field of financial stability. I shall look at the big banks first before turning to the domestically focused banks. I will conclude with a few words on the new banknote series. Big banks  As Thomas Jordan has already noted, the international economic environment has continued to improve since the last news conference in June. Conditions on the financial markets have remained stable. Premia for bank credit default swaps, for instance, have barely changed since June. Premia have thus settled at lower levels again following the turbulence in 2016. Against this positive backdrop, both of Switzerland’s big banks remain on track to meet the requirements of the ‘too big to fail’ regulations with respect to resilience. This first pillar of the regulations covers requirements pertaining to the going-concern loss-absorbing capacity of systemically important banks. Both Credit Suisse and UBS already comply fully with the final 1, risk-weighted requirements. However, further improvement is needed with respect to the leverage ratio. Both of the big banks have also made progress on the second pillar of the regulations, ‘resolution’, which covers the orderly restructuring and wind-down of a bank that can no longer function as a going concern and is thus deemed to have become a gone concern.