inflicting damage on third parties through our own failure. a second phenomenon, which is germane to switzerland, is the fact that - in comparison with other countries - the two big banks, cs and ubs, garner a very significant share of all banking transactions. without doubt, this results in a high concentration of risk, but also yields some significant advantages. two such advantages stand out : - the collective efforts of our banking sector are governed by a natural leadership structure which facilitates and accelerates development processes, - and, secondly, the two big players act in some measure as know - how brokers, swiftly incorporating the year 2000 experiences gained abroad into the process of solving the problem in this country. more generally speaking, our long tradition of practical cooperation between competitors and of close ties between regulators and banks is a distinct plus in the preparatory work. jointly managed institutions like the swiss exchange, our central securities depository, or the swiss interbank clearing system are well - known examples of this spirit of cooperation. i am confident that the large - scale interbank tests scheduled to begin in may will provide us with a positive picture of the state of preparations. assuring liquidity from the viewpoint of a central banker, assuring adequate liquidity must be the prime concern. based on the nature of their business, banks are inherently vulnerable. withdrawals and redistribution of deposits can jeopardise the banks ’ capacity to pay. such effects, should they materialise at all, may take place as a millennium shadow before or during entering the next millennium. it is primarily the duty of individual banks to brace themselves for such events. they must undertake careful liquidity planning, comprising both a normal scenario as well as different stress scenarios. they must have a clear idea where, in what form, and to what extent they can cover their liquidity needs and make the necessary limits and collateral available. in this process, it is crucial that banks interfacing with large customers - enter into agreements with one another, thus creating a high degree of transparency. the goal is to limit the range of unexpected behavioural changes by creating transparency and reaching an understanding. looking at the issue from this vantage point also makes it clear that a strategy of avoiding transactions is completely contra - productive. even though it makes sense to avoid settlement dates of forward contracts falling immediately before and after the millennium transition, it is vital that transactions can be carried out and that markets remain liquid. it is at least conceivable that smaller banks or

, and have the potential to reduce black - market activity in israel. at the same time, they are leading the enhancement of competition by allowing new participants to enter the market and through the development of different business models to provide a variety of payment services and increase the customer ’ s ease of use. another aspect of competition is focused on the dynamic behavior of the supply side. in other words, the market is competitive when its participants are sufficiently aggressive and a competitor has the incentive to improve in order to gain an advantage over other competitors — whether the advantages are the result of improved quality and service, lower prices, additional services, and so forth. these aspects have also undergone many changes in recent years, whether as part of a natural market process, or as a result of regulatory encouragement, in adopting technological advancement alongside significant streamlining, that will enable the creation of the required competition on the supply side. in this regard, there is an interesting simultaneous link between efficiency and competition among the banks. streamlining enables the banks to lower prices in order to attract customers, or to provide new and higher - quality services for the same purpose. accordingly, it is possible that increased efficiency will actually lead to increased concentration, and will therefore be interpreted as a reduction in competition, because more efficient companies will have a higher market share, which will lead to increased market concentration. our job as regulators over this market is therefore to make sure, as the banking supervision department is doing, that the fruits of streamlining actually roll over from the banks to the broad public. when dealing with efficiency, many tend to think mainly about the operational efficiency of some organization. however, a significant portion of activity in the credit market depends on the ability of the various participants to use the various capital market instruments to “ offer their wares ", and mainly to provide credit. the extent of this mechanism ’ s efficiency, for instance in its ability to allocate sources and optimally distribute risk ( risk sharing ), has a tremendous effect on the ability to provide products that are relevant to their customers and make them accessible, in such way that they will increase consumer well - being and support increased competition in the credit market. 2 / 5 bis central bankers'speeches how can we advance this? through continued development of the capital market, particularly by increasing the level of sophistication of the market, which will enable the informed application of financial instruments that must be developed to advance the credit market. thanks to those instruments, it will be possible