We are convinced that our banks are better able to withstand a crisis today than they were ten years ago. What is more, banks’ management bodies and the supervisory authorities alike now have a better understanding of how to assess risks. The comprehensive implementation of the agreed measures will further improve the stability of our financial system. We will still have systemically important banks in the future. However, these must no longer be too big to fail; that is to say, the state and taxpayers must no longer have to fear being held hostage. The new banking regulations therefore contribute to reducing risks, but they also take into account both the considerable economic importance of Switzerland’s banking sector and our interest in having a significant financial centre. I would like to cross over here, if I may, to the sovereign money initiative. The authors of this initiative hope that, if adopted, it would result in a more stable financial system. However, switching to an untested sovereign money regime would radically transform Switzerland’s tried-and-tested financial framework. Given the lack of empirical data and comparable systems worldwide, such a transformation risks plunging Switzerland into a period of great  11  From the end of 2019, both of Switzerland’s big banks must have a Leverage Ratio of at least 5.0% and an RWA Ratio of at least 14.3% on a going-concern basis, excluding the countercyclical capital buffer. Added to this are the gone-concern requirements in the same amounts (without taking any reductions into account).

At the same time, it is crucial to carefully assess the macro-economic impact of the measures. In this context, the outcome of the quantitative impact assessment that is currently being conducted needs to be awaited before taking any final decisions. Inappropriate calibration of the measures may impact on the provision of credit to the real economy. This is particularly relevant for the EU financial system which is more bankdependent and where the substitutability between market finance and bank finance is more limited when compared to, for example, the US. The main challenge consists in ensuring a more resilient and stable financial system that neither compromises economic recovery nor unduly impinges on financial innovation. Second, we need to ensure that we effectively capture all systemically important financial institutions, products, markets and infrastructures within the scope of regulation. One of the lessons from the crisis was the need to make the shadow banking sector more transparent. This becomes more urgent as we tighten the regulatory net for the banking sector. Otherwise we may simply shift risks to unregulated or more loosely regulated entities. In this respect let me mention the OTC derivative markets. These markets should be subject to greater transparency by promoting the reporting of non-centralised trades to trade repositories. Additionally, we should promote the clearing of eligible OTC derivatives transactions through central counterparties, which should be themselves subject to high prudential and operational standards. Finally, we need to effectively address the risks posed by systemically important financial institutions.