At the same time, it introduced an unweighted capital adequacy requirement – a leverage ratio, to serve as a nonrisk-based backstop to the risk-based capital requirement for banks. The FSB measures are aimed at improving the resolvability of systemically important banks. In particular, requirements have been defined for resolution planning and for the accumulation of gone-concern loss-absorbing capacity. These measures are intended to ensure that systemically important banks can exit the market in an ‘orderly’ fashion in the event of a crisis. 17 18  For example, cf. FINMA (2009), p. 19. Cf. FINMA (2009), p.30 et seq. 19  Cf. Branson (2011), p.5: ‘For several decades we believed that the greater sophistication of risk management techniques allowed us to tolerate thinner capital cushions. We were wrong.’  Page 8/14  b) Swiss TBTF regulations rest on two complementary pillars …  In Switzerland, parliament had already passed a package of legislation back in 2011 that recognises the special importance of the ‘too big to fail’ issue and is in line with the international approach. It is based on two complementary pillars with special requirements for systemically important banks. The first pillar defines measures to strengthen the resilience of these banks and thereby reduce the likelihood of a systemically important bank getting into financial distress. In particular, the revised regulations impose stricter capital and liquidity requirements on banks. They have to meet both risk-weighted capital requirements and a leverage ratio requirement. Equity capital allows banks to absorb losses, thus protecting them from insolvency.

This was demonstrated in the real estate crisis at the beginning of the 1990s and again in the most recent financial crisis. In the 1990s, the big banks were able to absorb at least part of the impact of the regional banking crisis on the economy, while during the financial crisis, the domestically focused banks, which were hardly affected, ensured that lending operations in Switzerland continued almost unimpeded. In addition, the following prerequisites must, in my view, be fulfilled, in order that the Swiss banking centre can retain its global importance and reach. The quality of the services offered by the banks, their crisis resilience and their reputations must all be considerably above average. Although, in principle, quality, crisis resilience and reputation are important for any financial centre, they are particularly crucial for Switzerland. On the one hand, our comparatively small country can only afford to host a relatively large international banking centre if this financial centre is extremely stable since, naturally, the resources available for emergency bank rescues are limited. On the other, an irreproachable reputation makes a major contribution to ensuring that the business operations of Swiss banks are not subject to constant political and legal pressure from abroad. And, again, excellence in service quality and products offered is essential if banks from a small country are to export their services successfully and secure significant market shares for themselves in international competition for customers. It is above all the banks themselves who face the challenge of fulfilling these prerequisites.