increased. it is even more difficult for them to find yield - bearing investments. i should emphasise, however, that this investment predicament is an international phenomenon and not limited to the swiss franc alone. conclusion i will now come to my concluding remarks. initial experience has shown that the interest rate instrument is also effective in negative territory. as intended, negative interest on sight deposits at the snb was rapidly transmitted to all segments of the money and capital markets. in the current situation, negative interest fulfils a very important monetary policy purpose : to help correct the overvaluation of the swiss franc over time. bis central bankers ’ speeches

the process of being comprehensively revised. in line with the features i have just outlined, the new regime will ensure that the big banks are able to cover their potential liquidity needs in the event of a widespread loss of market confidence. the new regulation will enter into force in spring 2010. compensation with the preventive measures i have just mentioned it will also be necessary to strengthen the incentives for prudent risk taking within financial institutions. compensation systems must not remain the one - way street they were for many individuals and firms in the run up to the crisis. they must become risk aligned and long - term oriented. banks and regulators must not let the returning competitive pressures for competent staff erode the momentum toward this goal. this is why we need a strong and broad international commitment to implement the fsb principles for sound compensation and the corresponding fsb implementation standards at national levels, in a manner that is consistent across national borders. 12 see also squam lake working group on financial regulation, “ an expedited resolution mechanism for distressed financial firms : regulatory hybrid securities ”, april 2009. during the crisis, the volume and maturities of repo transactions decreased sharply. a number of countries, including switzerland, have already passed national norms in response to the fsb standards. the fsb will conduct a peer review by spring 2010. facilitating the orderly resolution of banking problems while we can reasonably expect that preventive measures will strengthen the resilience of the financial system, we cannot ignore the problem of bank failures. even with much improved shock absorbers, large and systemically important banks will again experience severe financial stress at some point in the future. here we must accept that we still have not dealt with the fundamental problem that systemically important banks cannot currently be allowed to fail. the truth is that, if tomorrow morning a systemic institution were once again to find itself on the brink of failure, we would again face the terrible choice between either coming to its rescue at the expense of taxpayers or putting the stability of the financial system at risk. moreover, as long as banks can expect public support, market discipline will always be undermined. moral hazard has been exacerbated by the fact that there is no longer any ambiguity about the willingness of the public sector to bail out large banks. in other words, we must acknowledge that the wide - ranging public support measures have aggravated the moral hazard problem associated with large and complex financial institutions. frankly speaking, we have no choice but to address the specific challenges