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

jean - pierre roth : life in a two - headed monetary system - the swiss experience speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the 50th anniversary of the bank of israel, jerusalem, 29 november 2004. * 1. * * introduction it is almost a common - place to state that the birth of the euro on january 1, 1999 was a milestone in the process of european integration. giving up national sovereignty in monetary matters was without doubt a very bold move of historical proportions. it will have long lasting economic and political consequences. it is meant to promote efficiency, transparency, and growth. the creation of a single currency should also act as catalyst towards further european integration. moreover, and this is really what i would like to focus on today, the creation of the euro has changed the world ’ s monetary landscape. i believe that one can say without fear of exaggeration that it has led to a new international monetary order. countries such as israel and switzerland, situated on the periphery of the euro area, are affected as well. i would like to share with you some of our experiences in this regard, and i would be very interested to know to what extent these findings apply to your country too. 2. our pre - euro worries quite frankly, my colleagues and i at the swiss national bank were somewhat worried before the introduction of the euro. although we fully appreciated the benefits that switzerland would draw from the creation of the euro in terms of increased transparency and lower transaction costs, we were also quite concerned about the possible risks. three of these came to mind. first, we feared that the swiss franc might be in for a bumpy ride. in the past, whenever the dollar was under attack, international investors turned their attention to the german mark and the swiss franc. their status as safe - haven currencies meant that at times of turbulences on foreign exchange markets they would move well beyond what economic fundamentals could justify. in fact, the swiss franc often revealed a tendency to appreciate even more than the german mark, a phenomenon that was generally attributed to the relative narrowness of the swiss financial markets. now with the german mark gone, wouldn ’ t all attention focus almost exclusively on our currency? would it not mean that in a dollar crisis the franc would have to bear even more of the adjustment than in the past? even more frightful, what would happen if the euro itself were under attack? the last thing