Politicians and authorities should therefore concentrate on creating an appropriate combination of business conditions. These should be designed in a way that provides the best possible support to the banking industry, so that it can fulfil the prerequisites for a successful future which I mentioned before. Key factors: regulation, stability, privacy, market access What does an appropriate combination of business conditions for the banking industry look like? I would like to highlight four factors. First, relevant and effective bank regulations must be implemented and enforced. Allow me to elaborate on this point. Regulations are relevant if they are targeted at a specific market failure which constitutes the reason for the intervention. At the same time, the regulations must be compatible with international standards. If necessary, a “Swiss finish” must be added. The “Swiss finish” is not because we want to be a model pupil. It is needed in cases where the global minimum requirements do not guarantee the desired level of stability for Switzerland, because of our particular circumstances. Effective regulations mean that the goal which the measures aim to achieve can actually be achieved, and that compliance with the rules can be efficiently enforced and monitored. Finally, it is obvious that regulations are always associated with costs for the entities being regulated. These private costs are justified from an overall economic point of view as long as the regulations are in line with the principles I have already mentioned and thereby help to make the banking industry much more stable.

BIS central bankers’ speeches  Nevertheless, from an economic point of view, Switzerland still has a major interest in a strong banking centre of international importance. However, great efforts are required to ensure that the Swiss banking centre can remain successful in the global arena in the future. It is the banks themselves which are mainly challenged. They must ensure that their services provide customers with value added which is well above average. At the same time, their crisis resilience must be considerably above average and their business conduct and reputations far beyond reproach. In this respect, politicians can support the banks. However, industrial policies in the area of finance should be avoided. Support for banks should rather come through the creation of an appropriate combination of business conditions. The emphasis should be on measures which strengthen the crisis resilience and reputation of both Switzerland and its banking centre in the long term. In my view, this can be achieved if the TBTF issue is alleviated, Switzerland’s stability in general preserved, and both the privacy of honest tax-paying bank customers and global market access for banks guaranteed. I believe that all players are aware of the major efforts that this requires. I am therefore confident that in addition to looking back over a great past, the Swiss banking centre can look forward to a successful future. References BAKBASEL 2013. Die volkswirtschaftliche Bedeutung des Schweizer Finanzsektors. Cihák, Martin et al. 2012. Benchmarking Financial Systems around the World. World Bank Policy Research Working Paper No. 6175.