15  Today our toolkit  contains three specific liquidity insurance facilities offering money and/or high quality collateral for variable terms and prices as well as the liquidity insurance offered in the course of implementing monetary policy. 16  But there’s little point opening the door to our business more widely if only a narrow range of shapes fit through it. So as well as expanding the quantity of our tools at our disposal, over the years we have worked to extend the access to them by making our facilities cheaper and making them available against a wider set of collateral and to a larger number of counterparties. 10  An excellent description of how banks operate is given in McLeay, M. et al (2014), “Money creation in the modern economy”, Bank of England Quarterly Bulletin 2014Q1, available at https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/moneycreation-in-the-modern-economy.pdf. 11 Bagehot, W. (1873), “Lombard Street” 12 These were the ability to vary reserves demand both intra-day and day-to-day, and the Standing Facilities which provided overnight liquidity insurance, allowing banks to borrowing reserves in unlimited quantity, secured against very high quality collateral or deposit excess reserves directly with the Bank. 13 The Special Liquidity Scheme operated as a ‘collateral swap’, allowing banks to exchange their illiquid assets (principally packaged as an ABS or covered bonds) for liquid UK T bills. 14 Winters, B. (2012), “Review of the Bank of England’s framework for providing liquidity to the banking system”, available at https://www.bankofengland.co.uk/-/media/boe/files/news/2012/november/the-banks-framework-for-providing-liquidity-to-the-banking. 15 The Bank’s response to the Winters review can be found at https://www.bankofengland.co.uk//media/boe/files/news/2013/march/response-of-the-boe-to-the-three-cort-commissioned-reviews.

Jean-Pierre Danthine: Swiss banks from a financial stability perspective Introductory remarks by Mr Jean-Pierre Danthine, Vice Chairman of the Governing Board of the Swiss National Bank, at the media news conference of the Swiss National Bank, Berne, 20 June 2013. *  *  *  As my colleague Thomas Jordan has explained, economic and financial conditions for the Swiss banking sector continue to be challenging. Against this background, I would like to examine the situation at Swiss banks from a financial stability perspective, looking first at the big banks and then moving on to a discussion of domestically focused banks. Big banks: strengthening resilience Over the past year, the Swiss big banks have substantially improved their capital situation. Risk-weighted capital ratios have been raised markedly, and both banks are now very well placed in an international peer comparison. Moreover, with its capital-building, Credit Suisse has also raised its leverage ratio considerably. Measured in terms of loss-absorbing capital – defined as Common Equity Tier 1 capital plus high-trigger contingent capital instruments – leverage ratios at the big banks are now at roughly the same level. However, given the prevailing risks in the environment and the losses incurred in the recent crisis, the SNB still considers current leverage ratios at the Swiss big banks to be low. In addition, a number of comparative studies imply that, in terms of leverage ratios, UBS and Credit Suisse are currently below the international average.