philipp hildebrand : current state of the financial system in switzerland introductory remarks by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the half - yearly media news conference, berne, 20 june 2009. * * * introduction this time last year we reported that the overall market environment had calmed somewhat. however, we also stressed that it was too early to sound the all - clear, and that there was considerable uncertainty about the future development of the crisis. our concerns at that time proved more than well - founded. indeed, the actual events outstripped our expectations. if i may, i will start with my conclusion : the state of the swiss and international financial system is – and remains – vulnerable overall. consequently, we are still maintaining close contact with the big banks and with swiss and foreign authorities, and are monitoring further developments with great attention. in addition we are continuing our intensive efforts at national and international level to improve the regulatory framework. given the scale of the crisis, the swiss national bank ( snb ) is convinced that although the measures taken so far in this area are heading in the right direction, some of them do not yet go far enough. i will therefore begin by briefly assessing the situation of the financial system, and then present the issues to which the snb attaches medium to long - term priority with regard to reform of the banking sector operating environment. in the short term, however, the main focus is on overcoming the crisis. situation in the banking sector as our financial stability report published today describes in detail, the situation in the swiss banking sector deteriorated considerably in 2008. the turbulence in the money and credit markets that had erupted in mid - 2007 worsened in 2008, also spilling over to other areas. the two big banks, in particular ubs, were hit hard by these negative developments. as you know, together the two institutions recorded a total loss of some chf 30 billion in 2008. 1 they took extensive measures to strengthen their resilience. in addition to reducing risky positions, they raised sizeable amounts of private capital. the resilience of ubs was further strengthened by the package of government measures announced by the federal council, the snb and the then swiss federal banking commission ( sfbc, now finma or swiss financial market advisory authority ) in october 2008. owing to all of these measures, the big banks ’ capital situation at the end of 2008 improved slightly compared to the end of 2007,

##ntial oversight carried out by finma. however, in switzerland, overlaps occur naturally between the microprudential and macroprudential perspectives due to the systemic importance of the two big banks. within the ambit of its mandate, the snb therefore considers it imperative to maintain direct and frequent contact with the big banks. where necessary, we will step up the frequency and intensity of these contacts. their purpose is to obtain information of relevance for macroprudential oversight, but also to inform the big banks of our risk assessment. the snb will also become increasingly involved in regulatory projects that are relevant from a systemic point of view. initial examples are the work on the introduction of a leverage ratio and on the reform of liquidity regulations, which finma and the snb have been driving forward together. this development does not essentially call into question the division of responsibilities between the supervisory authority and the central bank. however, because of the importance of the big banks for our financial system and our economy, greater weight must be given to the macroprudential perspective, both in the oversight of the financial system and in its regulation.