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Thomas Jordan: Bank regulation – what went wrong? What will improve? Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Forum für Universität und Gesellschaft, Berne, 24 March 2010. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The financial crisis has caused enormous damage. Massive losses were recorded in the global banking system. Many countries have gone through the worst recession since the Second World War. Government rescue measures had to be implemented to stabilise the financial system. Existing bank regulations were not able to prevent the crisis, nor were they able to at least contain the damage to such an extent that government rescue packages would not have become necessary. While before the financial crisis, there was considerable uncertainty about possible shortcomings in bank regulation, these have now become apparent and will have to be tackled. In addition, the provision of implicit state guarantees has made the need for action even more urgent. Big banks – believing that they will receive government assistance if they run into problems – have even stronger incentives now to take on excessive risk. This increases the risk of another crisis and erodes the fundamental principle of the market economy – competition. Once again, in the future, banks will have to bear their own risks. The failure of a bank should no longer jeopardise the stability of our financial system.