make systemically important banks more stable in future and reduce the likelihood of them running into difficulties. furthermore, organisational measures aim to ensure that systemically important functions can continue to be performed during a crisis, while simultaneously liquidating the big bank in an orderly manner. this reduces the need for state intervention. these measures may have different starting points and goals, but they all harmonise with each other. if the provisions for improving stability do not suffice and a crisis occurs anyway, the mechanisms that guarantee the continuation of systemically important functions will kick in. 4 in their entirety, these measures help to ensure that the banks are again able to bear more of their risks themselves. what are the objections to the package of measures? so why are there still objections to the swiss package of measures from various quarters, if the advantages are so obvious? do these measures have any harmful consequences? the proposal of the committee of experts and the message of the federal council can be downloaded at www. efd. admin. ch. the new capital adequacy regulations for systemically important banks are to apply to risk - weighted capital and to the leverage ratio. furthermore, they are designed to be progressive. in other words, the bigger the bank, the higher the requirement. given the current size of switzerland ’ s two big banks, the requirement would be 19 % total capital of the risk - weighted assets, of which 9 % can be held in convertible capital ( cocos ) and 10 % must be held in common equity. if common equity falls below the threshold of 5 %, the cocos will be converted and the emergency planning for separating the systemically important functions from the rest of the bank will be initiated. bis central bankers ’ speeches objections and doubts before the introduction of new regulations or laws are part and parcel of a thriving democracy. before implementation, we can never know with absolute certainty how our economy or society will react to changed framework conditions – there is therefore always an element of doubt. for instance, one objection to the package of measures is that the cost of taking such drastic action to achieve the transition to a more stable system would be too high. in addition, doubts have also been expressed concerning the rapid pace and the impact of the proposed reforms. although we can understand such criticisms, the snb believes them to be exaggerated and largely unfounded. allow me to explain. i would like to begin by making three general preliminary observations. firstly, regulation is never free of charge for

there are no theoretical or empirical grounds to indicate that the swiss economy will be adversely affected by the proposed regulation. even though, in the short term, the transitional phase would generate some costs for those regulated, this is clearly outweighed by the long - term advantages. is international competitiveness being weakened? the second concern expressed is that tougher banking regulation would have negative repercussions for the swiss financial centre if it is stricter or too strict compared with other countries in relative terms. critics say that this would be a disadvantage in international competition, with far - reaching consequences such as a weakening – or even redimensioning – of the swiss financial centre. they claim that customer assets and international companies would move abroad, since the swiss financial centre would no longer offer a comprehensive range of banking services. switzerland would therefore lose jobs and create less added value, they believe. key factors for international competitiveness one significant aspect of the discussion about the repercussions of regulatory differences is that other factors are at least as decisive for the international competitiveness of the swiss banks. these include favourable tax conditions, political and economic stability, a high degree of legal certainty, excellent asset management expertise and high standards in the banking business generally. overall, this “ swissness ” represents a crucial success factor for the banks when it comes to competing internationally with other financial centres. nor is there a connection, empirically speaking, with passing on the banks ’ financing costs to customers : during the phase when the banks were constantly reducing their capital ratios, the spread between the borrowing rate and the lending rate did not narrow ( cf. kugler, 2011. presentation in vienna ). bis central bankers ’ speeches secondly, we should bear in mind that a country - specific difference in banking regulation is nothing new. even before the financial crisis began in 2007, both the swiss big banks were subject to stricter regulations in terms of capital requirements than their competitors in many other countries. as already mentioned, finma ruled, in autumn 2008, that as of 2013, both big banks will have to hold double the amount of capital specified in international minimum standards. the current “ swiss finish ” therefore calls for an extra 100 %! however, these regulatory differences do not seem to have harmed the swiss financial centre in the past. on the contrary, switzerland ’ s banks have always had a tradition of a “ swiss finish ”. stability is one of the swiss financial centre ’ s clear competitive advantages and has made a significant contribution