Philipp Hildebrand: Financial stability
Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of
the Swiss National Bank, at the Institut des Hautes Etudes Commerciales de Lausanne,
Lausanne, 16 September 2008.
The complete speech can be found in French on the Swiss National Bank's website (www.snb.ch).
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During the period of financial market turbulence, central banks have gone far with their
interventions to stabilize the financial system, taking into account the high costs that can be
imposed by a banking crisis onto the real economy.
Central banks by themselves, however, cannot guarantee financial stability in the long term.
In particular, we cannot exclude that their interventions create incentives for banks to be less
cautious in the future. The first line of defence therefore consists of banks having sound risk
management practices and holding appropriate levels of capital and liquidity. The Financial
Stability Forum has made a series of recommendations in this respect.
Given the size of the big Swiss banks in relation to our national economy, we should be
especially prudent. For this reason, the Swiss National Bank supports the project undertaken
by the Swiss Federal Banking Commission (SFBC) to strengthen capital adequacy
requirements and to revise the liquidity requirements for the big banks. As the SFBC has
pointed out on several occasions, these measures have to be implemented gradually - to
ensure that banks have sufficient time to adapt. These measures will contribute to the solidity
and credibility of the Swiss financial centre. This will strengthen its position as a global leader
in wealth management.