out by the swiss national bank ( snb ) should be seen as part of these measures.... but the resilience of the big banks has been increased given this situation, the fact that it has been possible to increase the resilience of the swiss big banks is crucial. credit suisse boosted its capital through private investors by a total of chf 10 billion. it thereby strengthened its equity position substantially and increased its capacity for absorbing additional shocks. the losses of chf 3 billion announced by the bank for the fourth quarter show how important it was to reinforce the capital base. at ubs, the government package provided significant relief to the balance sheet from the burden of illiquid positions particularly affected by the crisis. with this package, the snb made it possible for ubs to transfer illiquid positions to a special purpose vehicle. the ubs provided this special purpose vehicle with equity amounting to usd 6 billion. the confederation compensated ubs for the capital requirement arising for this purpose by subscribing to mandatory convertible notes ( mcn ). since the announcement of the package, the ubs liquidity situation has stabilised. the numerous international measures aimed at stabilising the financial system have also had a positive effect on the position of the swiss big banks. nevertheless, further losses cannot be ruled out in view of the difficult market conditions. the situation remains serious, and the snb will continue monitoring it closely together with the swiss federal banking commission ( sfbc ) and the federal department of finance. lessons from the crisis and reforms in switzerland i would now like to speak about the lessons learned from the crisis. the continuing financial crisis is almost unprecedented, in terms of both extent and duration. it is also unprecedented in terms of the measures taken by the authorities and the central banks with the aim of stabilising the situation and minimising the impact on the real economy. this also applies to switzerland. at the presentation of the last report on financial stability, we expressed our conviction that the financial system needs to be made more resilient to possible shocks. this is all the more valid if we consider the hundreds of billions of taxpayers ’ money that had to be spent worldwide on stabilising the financial system over the past few months. the focus is on the need for improvement in the “ shock absorbers ” : capital and liquidity. the crisis has shown that the current regulation in these areas is no longer sufficient in the case of the big banks.

particular growth, employment and the narrowing of social gaps, and to maintain the stability of the financial system and its proper functioning. recently inflation has been within the target range, and will probably remain within it until the end of this year. inflation expectations for next year, however, are relatively high. as the expectations are around the upper limit of the target inflation range, this does not present a serious problem at this stage, but it is our task to ensure that inflation should not exceed the upper limit of the target. to achieve that requires a slightly tighter monetary policy. let us turn now to the second goal, employment. the rate of unemployment, which increased during the crisis and declined during the recovery almost to its pre - crisis level, has recently risen slightly. this, in effect, is good news, as the unemployment rate has increased because of an increase in the rate of participation in the labor force, and not because of a drop in the number of employed persons. if the rate of participation had not risen, the rate of unemployment would today be about 5. 5 percent. our function is also to promote economic growth, and we therefore also keep an eye on developments in the exchange rate. the latest figures show that exports remained steady while imports declined, so that we expect the current account surplus to increase despite the relatively strong shekel exchange rate. nonetheless, we must continue to support exports, and we will therefore continue to intervene in the foreign currency market, and like every other country, we must be prepared for every possible economic scenario. with regard to financial stability, we are currently mainly concerned over developments in the housing market. the ministry of finance reports that prices of new houses have fallen, while the central bureau of statistics ( cbs ) reports that overall housing prices continue to increase. until the trends in the real estate market become clearer, the bank of israel must ensure that no bubble in housing prices develops that would harm financial stability. the best solution is to boost the supply of houses and thus lower their prices, and together with the ministry of finance we are examining ways of doing that. meanwhile, as i said, we must ensure that financial stability is maintained. another issue i would like to address is that of the medium term. the question is asked whether the recent discoveries of natural gas will have a major impact on israel ’ s economy. it is too soon to answer. we have to continue encouraging the various investors to keep searching for gas, and must await results. the immediate issue here is