Niklaus Blattner: Developments in the Swiss banking sector Introductory remarks by Mr Niklaus Blattner, Vice-Chairman of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Berne, 16 June 2005. *  *  *  With its Financial Stability Report, the Swiss National Bank (SNB) informs the public of the state of the financial system and presents its assessment of system stability. Moreover, the Bank provides indicators that may be used for an in-depth analysis. The SNB tracks developments in the banking sector from a macroprudential, i.e. a system-wide perspective. In so doing, it complements the task of the Swiss Federal Banking Commission (SFBC), which is responsible for microprudential oversight, i.e. for individual institutions. The part of the report that focuses on the banking sector mainly highlights strains or imbalances which could pose a threat to system stability in the short or longer term. In addition, the SNB reports on its activities in connection with the oversight of payment and securities settlement systems. This year it also provides information on the “Business Continuity Planning” (BCP) project, i.e. on preventive measures to overcome disruptions, thus strengthening the operational resistance of the Swiss financial centre. Banking sector The banking sector is currently stable. The stress index developed by SNB – an indicator which combines comprehensive information on potential stress symptoms in the banking industry – shows that the strains on the Swiss banking industry were extraordinarily low compared with the historical average. This is mainly attributable to three factors.

With these guidelines, the different systems can be monitored consistently, while at the same time keeping the administrative effort of the operators at an acceptable level. Business Continuity Planning (BCP) Different experiences in the recent past – from the 9/11 terrorist attacks in the United States to minor local technical difficulties – suggest that measures to strengthen the operational resistance of the Swiss financial sector must be taken. During the past year and a half, the SNB has headed a sectoral working group in cooperation with the SFBC secretariat. The group consists of representatives from infrastructure providers, financial institutions and the authorities and has conducted an in-depth analysis of the business continuity plans of the major players in the financial markets. The Business Continuity Planning (BCP) project focuses on precautionary measures to prevent the likelihood of disruptions. In addition, measures are taken to help cope as efficiently as possible with disruptions, once they have occurred. In its analysis, the working group focused on the two business processes which were considered to be especially critical for system stability and which must be maintained without fail even in exceptional circumstances. Firstly, the supply of liquidity to the financial system with central bank money by means of repos and, secondly, large-value payment transactions between the commercial banks in Swiss Interbank Clearing (SIC). The analysis began with the following scenario: a severe disruption causing the failure of an important operational centre and incapacitating its staff.