Once again, the leverage ratio is a good example of this, since it has to be complied with along with the fulfilment of risk-weighted capital requirements. It is harder to simply manipulate this kind of system through regulatory arbitrage. The benefit of complementary measures can also be strikingly illustrated using the example of the Swiss proposals aimed at mitigating the TBTF problem. The recommended policy mix represents a combination of complementary measures relating to equity, liquidity, risk limitation and organisation. More equity and liquidity must guard against insolvency on the part of systemically important institutions. These measures can support and supplement one another and, if necessary, counterbalance individual weaknesses. For instance, should the capital buffer prove insufficient and a crisis situation nevertheless arise, a rescue of systemically important functions can be facilitated by means of preparatory organisational measures involving improvements in the resolvability of banks. Integration in the international environment, yet accounting for national circumstances The fourth criterion is that the decisions on the measures that are finally taken must ultimately be embedded in an international framework while simultaneously taking account of specific national circumstances. At international level, in particular, agreements on regulatory standards are based on negotiations in which the interests of different countries at different stages of development, with specific financial market structures have to be reduced to a common denominator. Often these interests diverge significantly. A uniform definition of capital, the same risk weighting for assets around the world and the same calculation for the leverage ratio are extremely important.

Consequently, the need and the potential for mitigating the accumulation of systemic risk through regulation raises a number of questions with regard to the specific design of such regulation. Where do we start? How do we set priorities? Which principles should we abide by? The number of regulatory solutions that have been proposed are as numerous as the possible triggers of systemic crises. Often, individual solutions focus on one specific cause. In my opinion, there are so many possible causes of a systemic crisis that it is insufficient to focus on just one specific cause when drawing up possible regulatory solutions. It would be an illusion to think that the issue of systemic risk could be totally eliminated in the long-term with such an approach. Consequently, I believe it is important that the problem be approached in a systematic manner, and that comprehensible criteria for a list of measures that is likely to be effective be drawn up. Unless a roadmap is drawn up based on principles which guide us in the handling of the challenges we encounter in regulating systemic risk, there is a danger that decisions on the requisite measures will be made arbitrarily, that solutions lacking substance will be implemented or that nothing at all will be done. From the viewpoint of systemic stability, the result would be suboptimal. I will now talk about the criteria for assessing regulatory measures. Do the measures ensure market discipline?