risks entered into and the capital adequacy of the banking sector. to complete our analysis, we use newly developed models that quantify both the stress to which the banking sector is subjected and its correlation with the macroeconomic environment. the main characteristics and conclusions drawn from these models are published for the first time today. the models will be presented in detail in a series of snb publications. the analysis presented in the financial stability report indicates that the banking sector is stable. in 2003 it was able to raise its profits substantially in spite of a mixed macroeconomic and financial environment. thanks to these profits, banks were able to bolster their capital significantly, thus enhancing their capacity to absorb shocks. the resulting capital ratios in the banking sector are high both in historical terms and by international standards. this impression of pronounced robustness in the swiss banking sector is corroborated by the relatively low level ( in historical terms ) of the stress indicator. this is a new indicator calculated as a synthesis of different stress symptoms. the indicator considers in particular the capital ratios, profits, share prices and risk premiums on bonds in the swiss banking sector. as far as the outlook is concerned, we believe that the macroeconomic environment and the financial markets do not present any significant threat to the stability of the swiss banking system. the forecasts for 2004 point to a rebound in economic growth in switzerland and the european union along with a continuing upswing in the united states. moreover, the rise in prices on the swiss real estate market has remained moderate by both historical and international standards. it is thus unlikely that this market will see any abrupt downward adjustment - traditionally a major stress factor for the banking sector. and finally, the available indicators suggest that the major global banking sectors are also relatively robust. at present, therefore, the risk of contagion - i. e. of a crisis having repercussions on switzerland - is remote. two sources of potential stress should, however, be mentioned. first, a slowdown in the economy which, though unlikely, is still conceivable - could have negative repercussions on the quality of loan portfolios and on stockmarket prices. second, in the more likely event of a sustained economic upswing, a sharper - than - expected rise in interest rates could also worsen the quality of loan portfolios by increasing the interest burden on households and companies more than expected. analysis of the various scenarios suggests that sufficient capital is available in the swiss banking

speech embargo 26 october 2020, 4. 30 pm the importance of good framework conditions for the swiss financial centre lugano banking day thomas j. jordan∗ chairman of the governing board swiss national bank lugano, 26 october 2020 © swiss national bank, zurich, 2020 ∗ the speaker would like to thank christoph hirter for his support in preparing this speech. he also thanks simone auer and alexander perruchoud, as well as snb language services. page 1 / 5 ladies and gentlemen, i am pleased that this important event can go ahead at the second attempt, despite the continuing exceptional circumstances. of course, i regret very much that the audience cannot be physically present. despite all the digital possibilities available to us now, direct contact with the general public and with business remains very important for the swiss national bank. coronavirus has not only impeded the holding of this centenary celebration, it has also had a far - reaching impact on the economy and our social interaction. i am therefore particularly pleased to have this opportunity to congratulate the ticino banking association in person on its 100th anniversary. as chairman of the snb ’ s governing board, i visit ticino often and have meetings with representatives of the ticino banking association on an annual basis – under normal circumstances. the snb has had good relations with your association for many years. this is not surprising, since the ticino financial centre has a long history, as this centenary anniversary proves. however, recent years have left their mark on banks and insurance companies in ticino, as elsewhere. the financial crisis, the end of banking secrecy, the tax treaty with italy and now the coronavirus pandemic have posed major challenges for many institutions. nevertheless, the ticino financial centre continues to be vitally important for employment and value added in the italian - speaking region of switzerland. i will use my speech today to focus on aspects that i believe are important for the current and future potential not only of the ticino financial centre, but of the swiss financial centre as a whole. but first, i want to talk about why a well - functioning financial centre is of value to our economy. i will start with insurance companies. insurance companies bundle risks that households or companies would otherwise have to bear themselves, or would even be unable to take in the first place. and then, there are the banks. they perform a key economic role with their core business of collecting deposits and granting loans. in doing so, they enable, for