are essential in dealing with cyclical risks, and we need to continue to review the instruments at our disposal on an ongoing basis and to adjust them to the risk situation. 9 however, let me add at this point that, although the possible applications and effects of macroprudential instruments are important, they do have their limits. measures taken by the authorities are therefore no substitute for market participants ’ own responsibility – it is ultimately up to them to manage their risks. current assessment of the situation this takes me to our current assessment of the situation in switzerland. let me start by jumping to our overall evaluation. we consider the vulnerabilities on the mortgage and real estate markets to be at a high level at present. allow me to elaborate on this, first turning to the mortgage market and then to the real estate market. my focus is mainly on the residential property segment, since this is where we have identified the most serious risks in the current situation. cf. the associated recommendations of the imf in connection with its comprehensive review of the swiss financial system in 2019 : www. imf. org / en / publications / cr / issues / 2019 / 06 / 26 / switzerland - financial - sector - assessment - program - 47045 consulted on 30 august 2021 ). page 7 / 12 strong growth and increasing affordability risks in mortgage lending various mortgage market indicators show that, in recent years, mortgage volume has grown more strongly than can be explained by fundamental factors. for example, aggregate mortgage debt, as measured by the ratio of outstanding mortgage loans to gdp, has risen sharply since 2009 ( cf. slide 2 ). the increase was particularly marked last year due to the strong decline in gdp in connection with the coronavirus crisis. we expect the ratio to decrease again somewhat as the economy recovers. nevertheless, the current ratio of around 150 % in switzerland is high not only by international comparison, but also by our country ’ s own historical standards. over the past years, however, the snb has focused less on the increase in the volume of mortgage loans than on their quality. the main focus in this context has been on affordability risk, i. e. the risk that borrowers cannot afford their mortgage costs in the long term. the following calculation represents a standard metric used by banks to assess the affordability of a mortgage loan : affordability is deemed to be appropriate if the imputed costs of an owner - occupied residential property – i. e. the costs resulting from interest payable

building resilient financial institutions. the first element of reforms centered on the basel iii package. the quality and level of capital has been increased and new standards for liquidity has been introduced. in addition, leverage has been constrained and explicit macroprudential dimension has been introduced. 7. although we started a year late, basel iii implementation in indonesia has been in accordance with bcbs phase - in arrangements since 2014. i am pleased to inform you that indonesian banks are not facing significant challenges, especially with regards to the capital reform, due to the high levels of capital ratio dominated by common equity tier 1. indonesia has also 2 of 6 implemented the countercyclical capital buffer and capital conservation buffer in addition to the minimum capital requirement. 8. in terms of liquidity coverage ratio, banks that are required to adopt the standard have no major difficulties complying. nonetheless, we continued to monitor the long run impact of the requirement. 9. ending too - big - to - fail. the next core element is ending too - bigto - fail. a set of measures, known as the systemically important financial institutions ( sifi ) framework, has been introduced. 10. although indonesia is not home jurisdiction of the global systemically important banks, a number of domestic banks are required to meet capital surcharge that varies between 1 % to 2. 5 % to reflect their systemic importance in the domestic financial system. 11. indonesia has also passed the law on prevention and resolution of financial system crisis in april 2016. the law enables related financial stability authorities to implement a more rigorous banking regulation and supervision, particulary for domestic systemically important banks, including the provision of recovery plans. it also provides legal foundation of bail - in mechanism. ladies and gentlemen, 12. making derivatives markets safer. the third fundamental area of reform is in the otc derivatives market. the crisis highlighted how the opaque inter - connections across financial institutions engaged in trading complex derivative contracts over - the - counter and poor risk management led to rapid contagion and systemic crisis. 3 of 6 13. the reform has focused on 5 ( five ) areas : standardization of derivative contracts ; platform trading ; central clearing ; higher margin and capital requirements for non - centrally cleared trades ; and mandatory reporting of all trades. indonesia has implemented reporting requirement for banks engaging in otc derivatives transactions. in addition, platform trading are required for both equities and commodities derivatives. national authorities are also in the proceses of establishing a ccp