within the direct accountability of bank executive management. liquidity provisioning must begin in good times. it is critical that sufficient liquid assets be held. only first - class securities are suitable for this purpose. these can be sold in the markets or mobilised via repo transactions, even in difficult conditions. in an acute crisis situation, the availability of sufficient liquidity, together with a strong equity position, is absolutely crucial. fourth and finally, i would like to mention that, in the swiss franc money market, repo business via the swiss value chain has proved to be a crisis - resistant source of liquidity, thanks to the consistent minimisation of risks. the repo market allows participants to undertake rapid refinancing in the interbank market, independent of credit limits, thereby making a major contribution to the stability of the financial system. that is why it is important for the snb that all swiss and foreign banks operating in the swiss franc money market join the swiss repo system.

philipp hildebrand : the challenge of sovereign wealth funds speech by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the international center for monetary and banking studies, geneva, 18 december 2007. i would like to thank signe krogstrup for her valuable support in drafting this speech. i also want to thank rita kobel, urs w. birchler, daniel heller and bertrand rime for helpful comments and discussions. * 1. * * introduction i am very pleased to be in geneva. the international center for monetary and banking studies ( icmb ) provides a wonderful platform to discuss a wide range of economic and monetary policy challenges. on behalf of my icmb foundation board colleagues, i would like to thank charles wyplosz for his successful and long - standing stewardship of the icmb. tonight, i want to talk about sovereign wealth funds ( swfs ). broadly defined, swfs are government - owned investment corporations. for the most part, they invest their funds in foreign currency assets. swfs are usually managed separately from central bank reserves. unlike other publicly owned pools of capital, such as social security funds or public pension funds, swfs have no explicit liabilities. as you can see in slide 1, the estimated assets currently managed by swfs exceed the combined pool of assets managed by hedge funds and private equity firms. total assets held by swfs remain small, however, in comparison to the combined assets managed by pension funds and mutual funds worldwide. the rise in swfs is closely linked to the global macroeconomic imbalances that have characterized the world economy since the mid 1990s. since these imbalances are unlikely to unwind in the near term, swfs are likely to keep growing disproportionably for some time. the rapid rise of swfs has undoubtedly brought a number of benefits. one of them has recently become particularly evident. against the backdrop of the current market turmoil, swfs have been a welcome source of capital, strengthening the vulnerable balance sheets of some of the world ’ s largest financial institutions. i will return to this important point at the end of my lecture. but the investments made by swfs have also given rise to considerable political controversy and media coverage. slide 2 provides a sample of some of the most pertinent recent headlines. the political controversy does not derive from the fact that swfs are new. they are not. political leaders are anxious because the