speech embargo 26 october 2020, 4. 30 pm the importance of good framework conditions for the swiss financial centre lugano banking day thomas j. jordan∗ chairman of the governing board swiss national bank lugano, 26 october 2020 © swiss national bank, zurich, 2020 ∗ the speaker would like to thank christoph hirter for his support in preparing this speech. he also thanks simone auer and alexander perruchoud, as well as snb language services. page 1 / 5 ladies and gentlemen, i am pleased that this important event can go ahead at the second attempt, despite the continuing exceptional circumstances. of course, i regret very much that the audience cannot be physically present. despite all the digital possibilities available to us now, direct contact with the general public and with business remains very important for the swiss national bank. coronavirus has not only impeded the holding of this centenary celebration, it has also had a far - reaching impact on the economy and our social interaction. i am therefore particularly pleased to have this opportunity to congratulate the ticino banking association in person on its 100th anniversary. as chairman of the snb ’ s governing board, i visit ticino often and have meetings with representatives of the ticino banking association on an annual basis – under normal circumstances. the snb has had good relations with your association for many years. this is not surprising, since the ticino financial centre has a long history, as this centenary anniversary proves. however, recent years have left their mark on banks and insurance companies in ticino, as elsewhere. the financial crisis, the end of banking secrecy, the tax treaty with italy and now the coronavirus pandemic have posed major challenges for many institutions. nevertheless, the ticino financial centre continues to be vitally important for employment and value added in the italian - speaking region of switzerland. i will use my speech today to focus on aspects that i believe are important for the current and future potential not only of the ticino financial centre, but of the swiss financial centre as a whole. but first, i want to talk about why a well - functioning financial centre is of value to our economy. i will start with insurance companies. insurance companies bundle risks that households or companies would otherwise have to bear themselves, or would even be unable to take in the first place. and then, there are the banks. they perform a key economic role with their core business of collecting deposits and granting loans. in doing so, they enable, for

example, private individuals to take out mortgages and companies to fund major investments. just how important the supply of credit is to the economy has been demonstrated by the coronavirus crisis. this past spring, many companies in switzerland experienced liquidity shortages due to disruptions in economic activity. in order to supply liquidity to companies quickly and with minimum red tape, the federal council drew up an aid package, together with the snb, the swiss financial market supervisory authority finma, and the banks. under this programme, the banks grant loans to companies. the confederation assumes the default risk and the snb provides the banks with liquidity through a new refinancing facility. thanks to this facility, banks can refinance these loans favourably at the snb policy rate of page 2 / 5 – 0. 75 %. all indications are that the supply of credit and liquidity to small and medium - sized enterprises in switzerland is currently working well. another feature of the financial centre is that, in carrying out their activities, banks and insurance companies themselves add value and create jobs. the financial sector is an important employer in switzerland, with around 218, 000 full - time positions in 2018. in that year, it generated a nominal gross value added of around chf 63 billion, or almost 10 % of gdp. 1 its size, however, means that both positive and negative developments in the sector have a particularly strong effect on switzerland. the snb, too, is dependent on an efficient and effective financial sector. this is because by granting loans, the commercial banks transmit our monetary policy to the swiss economy. and by participating in the swiss franc repo market, insurance companies, too, play a role in swiss money market pricing. the financial sector thus makes an important contribution to the transmission of our monetary policy. stable and well - capitalised banks the global spread of coronavirus has led to a sharp deterioration in the economic environment and financial market conditions. nonetheless, banks in switzerland have so far withstood the effects of the pandemic well. yet the turbulence has shown how important it is for banks and insurance companies to have adequate capital and liquidity buffers. a firm foundation for this is set out in swiss legislation. systemically important banks are required to hold sufficient capital and liquidity buffers. these institutions are also required to ensure their recovery or orderly wind - down in a crisis. over recent years, the globally active big banks have significantly strengthened their capital bases, reduced