cannot be resolved by adequate capitalisation. it is not surprising that such considerations are made primarily by central banks. after all, liquidity concerns are typical for central banks. on the macro level, maintaining the supply of liquidity is a monetary policy task. on the micro level, however, it is the task of each bank to bring its solvency into line with the risks. this requires that the liquidity risks be correctly assessed and managed, and that assets, which can if necessary be used as collateral, be made available. the central banks and supervisory authorities of the g - 10 countries should, therefore, increasingly focus their attention on minimising liquidity risks. this is of particular relevance to banks that are systemically important and internationally active. integrated financial market oversight : what now? in the meantime, the federal council decided on the further procedure regarding the federal act on financial market oversight ( finma act ). the federal department of finance will prepare a statement by the end of next year and submit it to the federal council. the statement shall comprise the first two parts of the report by the zimmerli expert commission ( on the creation of integrated financial market oversight and sanctions ). the third part of the project ( examination of expanded prudential oversight ) will be dealt with at a later point in time. the federal council has taken various concerns of the national bank into account. as regards the division of tasks between the supervisory board and the management board in particular, the federal council has moved closer to the view held by the national bank, which believes it important that the power of disposition remains with the management board. as a non - professional body, the supervisory board is inevitably faced with conflicts of interest, which could prove an obstacle to individual dispositions. however, the experience and know - how of the supervisory board can be fully exploited with regard to the deliberation of questions of principle, budget and important staff issues. furthermore, we support increased budgetary autonomy of the federal financial market oversight authority ( finma ), as we are convinced that a financial centre that is as complex and significant as the swiss financial centre requires an authority with a supervisory and management board whose powers are equal to those of the corresponding bodies of banks and insurance companies. the national bank backs the project regarding the finma act. we continue to view the integration of financial market oversight as a means to improve oversight rather than as an end in itself. should it emerge in the course of work - either with regard

use up its excess capacity. this would mean significant downside risk to our underlying inflation profile, which is already below target because of the expected dissipation of one - time inflation effects from meat, communications and dollar depreciation. obviously, these risks would be even more material if oil were to average $ 50 a barrel. adding at least another year onto the period during which the economy would be operating below capacity and accepting more downside risk on inflation was considered unreasonable. accordingly, we decided that it was appropriate to take out some insurance against that downside risk in the form of a lower interest rate profile. policy insurance is a logical part of our risk management framework. today ’ s action is intended to reduce the risk that our inflation path might move materially to the downside, as well as cushion the impact of lower oil prices and facilitate the economy ’ s sectoral adjustment to its new circumstances. the bank has room to maneuver should its forecast prove to be either too pessimistic or too optimistic. bis central bankers ’ speeches we also considered carefully the matter of financial stability risks. for the past couple of years, we have seen periods of downside risk to the inflation profile, but the horizon over which we believed inflation would return sustainably to target remained reasonable, around two years. financial stability risks have been elevated throughout, sometimes evolving constructively, sometimes edging higher. but they did not pose sufficient concern to make it necessary to alter policy and delay further the economy ’ s progress toward sustainable 2 per cent inflation. the drop in oil prices, however, has two separate effects relevant to policy. as already discussed, it materially increases the downside risk to underlying inflation, but it also increases the household debt - to - income ratio significantly. while it is true that a lower profile for interest rates may exacerbate household imbalances at the margin by encouraging more borrowing, the far more important effect will be to mitigate those imbalances by cushioning the decline in income and employment caused by lower oil prices. ultimately, we believe the most reliable way to reduce financial stability risks is to do what we can to get the economy back to full capacity and sustainable inflation. finally, we discussed the risk that by moving today we would surprise financial markets. we generally prefer that markets not be surprised by what we do, and believe that transparency around our analysis of the economy will minimize the scope for surprises. in that respect, we took comfort from the observation that