reflects also the existing diversity of banks and jurisdictions and the sense that no singlepolicy approach, and no single hard - and - fast rule, could be applied to all banks of all shapes and sizes. consequently, the basel committee sought something bolder than a single, universal rule. the so called “ menu approach ” of basel ii offers different alternatives to different kinds of banks and jurisdictions, but in developing this approach significant efforts were made to ensure that the level playing field is maintained. we should understand that adopting an advanced approach requires significant investments and does not automatically reduce a bank ’ s capital requirements. in a more risk - sensitive capital framework, capital requirements for an advanced bank may actually rise relative to the current rules if the bank ’ s exposures are actually riskier than the measures under the 1988 accord would have suggested. furthermore, some national supervisors in emerging economies may set higher capital requirements than implied by basel i, perhaps even higher than those implied by basel ii, depending on the risk environment. the issue of competition between banks has also come up in the context of competition between countries. here, we should remember that basel ii is intended to help ensure that international competition in banking markets is driven by the strengths of each bank, rather than by differences in each country ’ s rules. one way that the committee has sought to promote a consistent application of the new framework is by providing detailed requirements where necessary. as i have already mentioned, these details may add to the appearance of length and complexity, but a balance is necessary to ensure greater consistency and a more level playing field. however, given the need for a framework which can be adapted to a wide range of circumstances, cooperation among supervisors is clearly the most important tool in achieving an appropriate level of consistency. to a large extent, the need for greater collaboration is a natural result of the increased level of internationalisation and integration in the financial sector. we have seen some structural developments over recent years that certainly pose challenges for both home and host supervisors alike, such as the emergence of locally significant - and systemically important - subsidiaries of foreign banks. also, a local unit in a foreign country may be systemically important for the group. but i think that, at least in some areas, basel ii will act as a kind of catalyst for action. under the new framework, internationally active banks will use systems whose recognition and on - going validation will indisputably require vastly increased collaboration among supervisors. co - operation is a key word, but so

news conference berne, 14 december 2017 andrea m. maechler introductory remarks by andrea m. maechler i will begin my remarks with a review of the situation on the financial markets, before going on to discuss the progress made in reference interest rate reform. situation on the financial markets let me start with developments on the financial markets. the monetary policy pursued by the large central banks was once again the focus of attention for the financial markets in the second half of the year. given moderate inflation growth, financial market participants are expecting only a very gradual normalisation of monetary policy across the world. against this backdrop, government bond yields have remained persistently low. muted expectations regarding a move away from expansionary monetary policy, coupled with favourable economic data and good corporate results, have contributed to largely positive risk sentiment on the financial markets. this has been reflected, for instance, in a stock market rally, lower yield spreads on corporate bonds and reduced demand for safe - haven assets such as the swiss franc. in this positive market environment, volatility has remained low and volatility for the us equity and bond markets, calculated using option prices, has dropped to record lows ( cf. chart 1 ). despite positive economic data in europe, european stock indices have risen only moderately. the stoxx europe 600 has climbed some 3 % since mid - year. one reason for the modest stock market performance in europe is the strengthening of the euro, which impaired corporate earnings growth somewhat. by contrast, us companies recorded a strong increase in profits. furthermore, the prospect of lower corporate tax rates raised expectations of higher profits in the future. against this background, us stock indices reached record highs. the s & p 500 has risen by about 10 % since mid - year. swiss companies have benefited from stronger demand from europe and the weaker swiss franc. the swiss stock market ( smi ) also made substantial gains, up some 5 % ( cf. chart 2 ). page 1 / 5 berne, 14 december 2017 andrea m. maechler news conference the low yields on ten - year government bonds from advanced economies have remained virtually unchanged since mid - year. in the us too, although key rate normalisation is underway and the federal reserve has initiated balance sheet reduction, longer - term yields have risen only marginally until now. on the foreign exchange market, the us dollar initially continued on the downward path it had been following since the beginning of the year. the dollar then strengthened again somewhat