At the forefront are the regulatory requirements on banks’ equity capital and liquidity through laws and ordinances by the federal government and FINMA. Moreover, in Switzerland, the self-regulation rules for banks also constitute an important element. Thus, the relevant legal requirements are supplemented by rules and guidelines set by the Swiss Bankers Association, which FINMA can also recognise as a minimum standard. 8 This instrument has been applied several times over the past few years in relation to the mortgage and real estate markets. 8  Cf. finma.ch/en/documentation/self-regulation/ (consulted on 30 August 2021). Page 6/12  At international level, the SNB participates in various committees and working groups, such as the Basel Committee on Banking Supervision. The recommendations and agreements of these bodies in turn have a major influence on our national legislation. One example of this is the CCyB. It was devised at international level and introduced in Switzerland in 2012 by means of a Federal Council ordinance. The CCyB is a key instrument for counteracting imbalances on the mortgage and real estate markets. When activated, banks are obliged to temporarily increase their equity capital beyond the levels imposed by existing capital requirements, depending on the magnitude of the vulnerabilities. The CCyB is designed to strengthen the resilience of the banking sector against the risks of excessive credit growth and also to counter any unsustainable credit growth. The capital buffer in Switzerland has so far been targeted at mortgage loans granted for residential real estate.

Macroprudential instruments  I would now like to turn to our options for countering potentially damaging developments on the mortgage and real estate markets and for strengthening the resilience of the banking system. What options does the SNB have? In specific terms, our macroprudential instruments comprise communication, participation in national and international regulatory work, and the authority to propose the activation, adjustment or deactivation of the countercyclical capital buffer (CCyB). Communication has a significant role to play when it comes to counteracting market participants’ tendencies to underestimate systemic risks and thus to take excessive risks themselves. After all, it is often hard for individual market participants to assess systemic risks. It takes an aggregated view to be able to identify unsustainable developments. As the country’s central bank, we adopt such an aggregated view. This is why the Financial Stability Report, the key element in our macroprudential communication, plays an important role. In this report, published once a year, we provide a detailed assessment of the stability of the Swiss banking sector as a whole and also comment on current regulatory proposals. As important as communication is, it is generally not enough on its own to contain stability risks. A regulatory framework is also required. The SNB participates at various levels in the design of this framework, both at national and international level. At national level, the SNB cooperates with the federal government and with FINMA in securing appropriate regulatory framework conditions.