to promote the introduction of more efficient cross - sector procedures. market participants should not focus exclusively on the lucrative trading aspect of future innovations, but they must also speed up the development of convincing solutions for the processing of these new transactions. otherwise, financial stability will be jeopardised. financial market infrastructures and banks increasingly share roles differentiating between traditional financial market infrastructures and banks – which was straightforward 20 years ago – is becoming increasingly difficult. on the one hand, the major international banks, in particular, provide services that one would normally allocate to financial market infrastructures. for instance, their customer base is so large that it is possible for them to conclude and settle trade orders outside the stock exchange. the same holds true for the settlement of payment transactions : the larger a bank, the more payments it can settle directly through its own systems. these ‘ in - house systems ’ compete with the actual interbank payment system, especially if the banks ’ customers are banks themselves. on the other hand, operators of financial market infrastructures are expanding into the core business of banks. for example, a number of central securities depositories and their participants are providing loans and liquidity facilities. although this is done primarily to facilitate the settlement of securities transactions, the line of demarcation from traditional financial intermediation is becoming increasingly blurred. also, by granting remote access or by establishing more efficient connections between the individual central securities depositories, they are offering serious competition to the traditional custodians. technological progress has been the driving force behind this blurring of roles between financial market infrastructures and banks. technology has enabled large banks to break into the operational field of infrastructure operators without much additional expenditure. indeed, they have been virtually obliged to do so, in order to utilise their it platforms to full capacity and to run them efficiently. on the demand side, the smaller financial institutions also benefit. as they outsource their back office functions to larger banks or specialised institutions, they can better focus on their core business. the infrastructure operators, in turn, are finding themselves in a situation where hardly anyone is willing to pay for traditional transaction services that have taken on a commodity character. consequently, they are diversifying and providing services that generate a higher added value. those infrastructure operators that are organised as profit - oriented public companies, in particular, are likely to further intensify competition with the banks in the future. this development is confronting the regulators with new challenges. many supervisory and oversight

to continue recovering this year. this recovery, however, is fragile, for it has until now been based largely on the support measures deployed by governments and central banks. uncertainty is still at an above - average level. downside risks have gone up again in recent months due to the financing difficulties faced by some european countries. urgently needed cost - cutting measures and rising risk premia could jeopardise the recovery and trigger another lengthy period of higher credit default rates, and even renewed turbulence on the financial markets. a development of this kind would present the swiss banking sector with a serious challenge : besides an economic slowdown and a slump in the financial markets, a further destabilising influence could be the spread of problems throughout the global banking system. thus indirect risks pose a serious threat to swiss banks, even if direct risks – measured by the direct claims on those countries particularly affected until now – are moderate. in this climate, it seems inappropriate to us that banks increase their appetite for risk. reforming the regulatory framework / “ too big to fail ” a year ago, we emphasised the urgency of alleviating the “ too big to fail ” issue. where do we stand today? allow me to state clearly right now : the “ too big to fail ” issue will not resolve itself. last year, the big banks significantly reduced their balance sheets – a move explicitly welcomed by the snb. the “ too big to be rescued ” issue has thus also receded somewhat. however, there has been hardly any alleviation of the “ too big to fail ” issue. big bank liabilities, which at the end of 2008 were still almost six times swiss gdp, were reduced by the end of 2009 to just over four times gdp. nevertheless, the big banks ’ share of markets relevant to the swiss economy – and hence their systemic importance – remains just as high as before : the big banks grant a third of domestic loans and hold a third of domestic deposits. in other words, switzerland is still vulnerable, and the need for action remains great. this opinion is shared by the commission of experts appointed by the federal council on “ limiting the economic risks posed by large companies ”, of which i am vice chairman. it is the commission ’ s assessment that in their current form and size, the big banks are clearly systemically important. the commission of experts published its interim report at the end of april. the “ too big to fail ” issue is to be addressed through a package of key measures