international level, the implementation of preventative measures is already well advanced, in that the basel committee on banking supervision – in coordination with decisions by the g20 and the fsb – has decided on important measures in the fields of capital and liquidity regulation. the consultation package on this matter will be published in early 2010. the measures designed to strengthen capital include stricter calibration of risk weights to determine the regulatory capital, improvement in the quality of this capital buffer and a direct limitation on the level of debt ( leverage ratio ). the combined effect of all these measures will be analysed by the basel committee during the course of 2010 in order to calibrate the overall capital requirements. liquidity regulation measures are aimed at securing financial institutions ’ flow of liquidity, particularly during times of crisis. the basel committee is proposing a global minimum standard for liquidity regulation. this is to ensure that financial institutions build up a liquidity buffer which allows them to remain liquid in short - term and medium - term stress scenarios. in line with the decisions of the basel committee, we have already implemented stricter riskweighted capital requirements in switzerland, supplemented by a leverage ratio. the capital requirements are designed to be anticyclical, i. e. in good times, banks are required to build up a capital buffer in excess of a given minimum level. by contrast, in bad times, the capital buffer is permitted to fall below that level. a new liquidity regulation is currently in the test and calibration phase. this regulation takes into account all balance - sheet and off - balance - sheet items that are of relevance in liquidity considerations, and is based – as far as possible – on internal bank liquidity management principles. it makes the big banks more resilient to disturbances in the interbank market or larger - scale withdrawals of deposits. it promotes longer - term financing as well as higher - rated securities that are capable of generating liquidity even in a stressed market environment. the new regulation is due to come into force in the second quarter of 2010. these advances and the broad consensus achieved at the international level can certainly be regarded as positive achievements. however, so far they only apply to preventative measures. as mentioned previously, these measures serve to reduce the probability of a crisis, but cannot always prevent its occurrence. another crisis is inevitable and we must be prepared for it. 3. resolution measures needed ; “ too big to fail ” is biggest challenge consequently, we need

philipp hildebrand : review of the international financial system introductory remarks by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the end - of - year media news conference, zurich, 10 december 2009. * 1. * * introduction at the news conference in june of this year we spoke of a gradual calming in the general financial market environment, although the outlook remains uncertain. since then we have seen a majority of banks returning to profitability. the horror stories being reported almost daily just over a year ago have now disappeared. it is very tempting just to go back to business as usual. however, we must not forget that – just over a year ago now – the international financial system was on the brink of collapse. support packages of an unprecedented size were being put together for the banks. exceptional monetary and fiscal measures were required to combat the dramatic plunge in the global economy – measures which have had to be kept in place to the current time. only by a narrow margin was a complete collapse of the financial system avoided and the danger of a major depression averted. this experience has clearly shown us all that the principle of sustainability needs to be a much more dominant element in the development of the international financial system than it was previously. this serves the interests of governments and taxpayers ; but it is also in the fundamental interests of the financial system itself, since it is not impossible that a future crisis could outstrip the resources of monetary and fiscal policy, thus rendering it impossible to rescue systemically important banks. 2. international approach consequently, there is broad international consensus between the relevant authorities on what the objectives of future regulatory measures should be. the financial stability board ( fsb ), in which switzerland is an active participant, has clearly formulated these objectives. the financial system must be brought to the point where it contributes to sustained economic growth. never again must it be allowed to combine such high risks with such minimal safety buffers. moreover, steps must be taken to avoid profits being privatised while losses are borne by the public at large. in essence, there are two ways of achieving this goal. the first approach is to adopt preventative measures aimed at reducing the probability of a bank collapse or a systemic crisis. this can be done by increasing safety buffers – for example, by imposing higher capital and liquidity requirements. the second approach is to take steps designed to reduce the costs of a crisis once it has already occurred. 2. 1 prevention at the