The clearest and most pressing example, in light of the economic and social consequences of the burgeoning number of jobless Spaniards, is the employment and labour market policies of those countries which, even at the height of crises, keep unemployment rates low. However, within the realm of financial regulation and supervision policies, the opposite is the case: our supervisory arrangements are being closely studied for reforms in other countries. The ingenious idea of Governor Rojo and his team to set in place a countercyclical mechanism in order to try and soften credit growth or at least mitigate the adverse consequences of its cyclical behaviour on the banking system was a forerunner of the countercyclical capital buffers envisaged in the Basel III Accord. The constraints on complex products and the obligation to consolidate are further examples of rules or guidelines that are characteristic of Spanish banking supervision and regulation and which fully coincide with the direction in which global financial system reform is advancing. Spain’s approach to restructuring its banking sector has demonstrable advantages. The process has been undertaken using the FROB (Fund for the Orderly Restructuring of the Banking Sector), which was set up following Parliamentary approval over 18 months ago and has since overseen numerous integration processes between savings banks that have reduced their number from 45 to 17. The design of the FROB was based around a twopronged approach.

Many supervisory and oversight authorities still pursue an institution-based approach. In other words, they apply different criteria to the same functions, depending on whether these functions are exercised by a bank, on the one hand, or by a stock exchange or central securities depository, on the other. Furthermore, banks and financial market infrastructures are mostly supervised or overseen by different authorities. The same applies to Switzerland. This brings with it the risk that regulatory differences are deliberately exploited. The question of whether financial market regulation needs to focus more on the function rather than on the institution so as to limit regulatory arbitrage would have to be examined. Regulation would then not be based on the legal status of an institution but on the functions actually exercised. 2  BIS Review 123/2006  Conclusion The picture I have given you of developments in the field of financial market infrastructures is by no means complete. Other developments that should be mentioned are the tendency nowadays to attach greater significance to measures relating to contingency planning and crisis management, or the growing movement towards organising financial market infrastructures as profit-oriented public companies observed in many countries. In Europe, in particular, there is pressure to consolidate the strongly fragmented infrastructure environment. This dynamic development challenges the operators of financial market infrastructures in particular. The decision-makers at the Swiss financial market infrastructures – SWX Swiss Exchange, SIS group and Telekurs group – also have to decide how they want to position themselves strategically.