of the impact that this is having on some areas which may not surface immediately. from our supervisory dialogue with banks, two notable impacts on bank culture caused by the pandemic situation are particularly worth our attention. 4. first, the pandemic disruptions may be taking away the momentum of culture effort which banks have been investing a lot in the past 4 - 5 years. for example, we have seen difficulties from banks in arranging promotion of risk culture and cascading the “ tone from the top ” to different levels of staff, simply because of the lack of f2f interactions. this has tremendously reduced the opportunities for staff to build rapport and foster a common culture, which is an important element in the culture promotion efforts. 5. secondly, the pandemic disruptions have effectively put bank culture under stress test. against the new mode of banking operation with significantly reduced f2f interactions, both amongst banking staff and between banks and their customers, there are signs of increasing hurdles in maintaining a sound bank culture. 6. on one hand, there are challenges in ensuring robust controls in a non - f2f environment. 1 / 4 bis central bankers'speeches reduced physical oversights of staff activities by supervisors could greatly reduce the effectiveness of conventional control mechanisms and practices that worked well in the past, and thereby increased the risk of poor customer outcomes. 7. at the same time, the pandemic is driving changes in customer behavior. customers have tried to avoid visiting bank branches in person as much as they can. if we look deeper at the statistics, the customer behavior of investment activities registered a significant change in the past two years. the proportion of online investment transactions out of all channels of retail banks has increased from 37 % in the first half of 2019 to over 50 % in the first half of this year. an even bigger increase was noted in long term insurance policies sold through digital channels by retail banks, which more than doubled in the first half of this year when compared with the second half of 2019. 8. some may argue that the rising trend in the use of non - f2f channels for distributing banking services would have continued with or without covid. but we could not deny the fact that the pandemic has injected a strong catalyst into this trend. so while we all embrace technology, and very much enjoy the convenience brought about by that, also we must not lose sight of the additional conduct risks involved. we have seen complaints, for example, that

thomas jordan : bank regulation – what went wrong? what will improve? summary of a speech by mr thomas jordan, vice - chairman of the governing board of the swiss national bank, at the forum fur universitat und gesellschaft, berne, 24 march 2010. the complete speech can be found in german on the swiss national bank ’ s website ( www. snb. ch ). * * * the financial crisis has caused enormous damage. massive losses were recorded in the global banking system. many countries have gone through the worst recession since the second world war. government rescue measures had to be implemented to stabilise the financial system. existing bank regulations were not able to prevent the crisis, nor were they able to at least contain the damage to such an extent that government rescue packages would not have become necessary. while before the financial crisis, there was considerable uncertainty about possible shortcomings in bank regulation, these have now become apparent and will have to be tackled. in addition, the provision of implicit state guarantees has made the need for action even more urgent. big banks – believing that they will receive government assistance if they run into problems – have even stronger incentives now to take on excessive risk. this increases the risk of another crisis and erodes the fundamental principle of the market economy – competition. once again, in the future, banks will have to bear their own risks. the failure of a bank should no longer jeopardise the stability of our financial system. only then, will our financial system become less prone to risk and will the extent of future crises clearly decrease. in order to achieve this goal, several measures have been decided on in switzerland. first, new capital adequacy requirements were enacted in 2008. big banks will have to double their risk - weighted capital. in addition, they will have to hold a minimum amount of equity capital, irrespective of the risk models they use internally. this is because the crisis has shown that internal risk models massively underestimated the risks taken. second, new liquidity regulations will be adopted. in the future, big banks will have to hold a sufficient amount of high - quality liquid funds to be able to cover unexpected liquidity losses for a period of at least 30 days. the reason for this is that, in the financial crisis, even solvent banks had liquidity problems. finally, measures to solve the “ too big to fail ” issue must be put into practice. no bank should be so systemically