- term interest rate level so close to zero. the sharp decrease in interest rates certainly helped to bolster domestic demand and thus avoid an even worse downturn. it was nevertheless not possible to completely escape an economic slump. it goes to show, yet again, just how close switzerland ’ s ties are with the eu and the global economy - both in good times and in bad. 3. switzerland as a global player switzerland does not only feel the winds of change in europe. as a small and open country, it is also strongly exposed to globalisation. foreign trade - measured as the sum of exports and imports in relation to the gross domestic product - has risen further in the past ten years. at the same time, the export and import structure has become more diverse. while the old eu countries have lost some ground, the emerging countries in eastern europe and asia have gained substantial shares. globalisation brings with it an increase in competition for the most attractive business locations. in recent years, swiss companies have founded or taken over companies outside europe on a significant scale - partly to cut costs, but in many instances also to be closer to the markets. to what extent switzerland has already become a global player is reflected by the impressive development of direct investments. these are investments through which an investor participates with at least 10 percent in a company abroad or establishes a subsidiary or branch abroad. in 2002, the stock of swiss direct investment abroad amounted to almost 100 percent of switzerland ’ s gdp, as against only 29 percent in 1990. compared with other industrialised nations, switzerland is in the top league. in the financial sector, globalisation has manifested itself particularly clearly. in the past few years, swiss banks have seriously boosted their investment abroad, mainly by taking over foreign financial institutions. at the same time, however, the swiss banking sector has undergone an intensive process of concentration, which partly resulted from domestic problems, but also came as a reaction to fierce international competition. the total number of banks halved from roughly 600 institutions at the beginning of the nineties to less than 300 institutions today. of the four big banks, only two remain. apart from this restructuring process, a number of other challenges have arisen over the past few years. notably the clean - up of the legacy from world war ii, the participation in the combat of money laundering, and also the protection of our interests vis - a - vis the eu, particularly with regard to banking secrecy and the taxation of savings income. lastly, the stock market

susan schmidt bies : a us perspective on basel ii implementation remarks by ms susan schmidt bies, member of the board of governors of the us federal reserve system, at the institute for international bankers seminar on the impact of basel ii on financial markets and business strategies, new york, 30 november 2006. * * * good afternoon. thank you for the invitation to participate in this seminar. we at the federal reserve welcome all opportunities to discuss current regulatory proposals and to hear the banking industry's comments about them. today i plan to provide an overview of developments in the united states relating to basel ii and the market risk amendment, as well as offer some thoughts about crossborder implementation of the new accord. the role of regulatory capital banking is, and should be, a business in which banks take and manage risks. bankers implicitly accept risk as a consequence of providing services to customers and also take explicit risk positions that offer profitable returns relative to their risk appetites. one of the most important jobs of bank supervisors is to ensure that banks maintain an adequate capital cushion against losses, especially during times of financial instability or stress. minimum capital requirements are a major tool for ensuring an adequate cushion. when developing minimum capital requirements, supervisors should continue to promote approaches that minimize the negative consequences of risk taking by financial institutions, particularly those institutions that could affect global financial stability. that is what we are doing with the basel ii framework. the federal reserve's main reason for pursuing the advanced approaches of basel ii is the growing inadequacy of current basel i regulatory capital rules for the large, internationally active banks that are offering ever more complex and sophisticated products and services. we need a more risk - sensitive capital framework for these particular banks, and basel ii is such a framework. in addition, basel ii promotes risk - measurement and risk - management enhancements and improves market discipline, while giving supervisors a more conceptually consistent and more transparent framework for evaluating systemic risk, particularly through credit cycles. basel ii should establish a more coherent relationship between regulatory measures of capital adequacy and day - to - day risk - focused supervision of banks, enabling examiners to better evaluate whether banks are holding prudent levels of capital given their risk profiles. for similar reasons, u. s. supervisors support the recent basel / iosco revisions to the 1996 market risk amendment ( mra ). since adoption of the mra, banks'trading activities have become more sophisticated and have given rise to a wider range of risks that