, the new secure swiss finance network, or ssfn, is based on the scion architecture developed at the eth. the ssfn is the communications network used by the swiss financial sector and is the first commercial application of scion. the idea for the ssfn grew out of an experimental collaboration between the eth and the snb. we have also cultivated an academic exchange with the kof swiss economic institute since the 1930s and are represented on its executive committee. these are just a few points of contact between the eth and the snb. even more significant than these links, 1 / 4 bis - central bankers'speeches however, is the fact that both of our institutions play an important role in creating the conditions for prosperity and growth in our country. the eth does this via its exceptional contribution to education and research. ladies and gentlemen, year after year your institution ranks among the top universities in the world – a formidable achievement. you educate the highly qualified specialists our country urgently needs. with your inventions and spin - offs, you also make a significant contribution to innovation and entrepreneurship in switzerland. by ensuring price stability and contributing to financial stability, the snb likewise plays a major part in shaping the conditions for prosperity in our country. stability is one of the most important framework conditions for switzerland. low inflation enables an efficient allocation of resources and is also essential for social cohesion. moreover, monetary stability is a fundamental prerequisite for politics and business in switzerland to function optimally and to perform their respective tasks sustainably. as both our organisations serve the interests of the country as a whole, their mandates are regulated by law – the eth act in the case of the eth and the federal constitution and national bank act in the case of the snb. however, both institutions enjoy autonomy and independence in the fulfilment of their mandates. these freedoms are also enshrined in law. the eth enjoys freedom in terms of teaching, learning and research. the snb, for its part, may not seek or accept instructions either from the federal council or from the federal assembly or any other body in fulfilling its monetary tasks. these provisions prevent special interests from influencing monetary policy decisions. independence in teaching and research on the one hand and in setting monetary policy on the other is anything but an end in itself, nor was it postulated by the legislature to make the work of our two institutions as pleasant as possible. on the contrary, it is an essential

g7 / g8 presidency and to ask the financial stability forum ( fsf ) for a statement. we in the fsf were unanimous in making a series of recommendations based on market discipline and indirect regulation of the already regulated hedge fund counterparties. these met with approval at the g8 summit in heiligendamm. the recommendations ask all participants, that is investors, counterparties, supervisors and hedge funds, to work actively towards increasing transparency and risk awareness. the hedge fund sector is called upon to review and enhance existing sound practice benchmarks, especially with regard to risk management, assessment and disclosure practice. i therefore welcome the fact that more than a dozen large hedge funds, which are all managed in london, have launched a remarkable initiative. under the leadership of sir andrew large, the group plans to develop improved sectoral standards based on the various recommendations and best practices that already exist. these home - grown sectoral standards are to abide by the principle of “ comply or explain ”. these standards are to cover assessment, disclosure and risk management and thereby the exact same areas identified by the fsf. of course, only time will tell if the group ’ s project will bring us closer to a code of conduct with mandatory disclosure requirements which is on the to - do list of the g7 / g8 presidency. i for one am taking this initiative seriously and see it as a good step in the right direction. the fsf ’ s recommendation to investors and counterparties is to actively obtain the information required so that market discipline has a chance to come into effect. this particularly concerns information on the risk profile. the fsf ’ s other three recommendations are addressed to financial supervisors. they should take an indirect approach to ensuring that systemically important financial intermediaries firstly strengthen their counterparty risk management practices and secondly prepare themselves for a sudden erosion of market liquidity. thirdly, financial supervisors should also explore the extent to which systematically collecting data from systemically important intermediaries on their consolidated counterparty risks vis - a - vis hedge funds would be an effective complement to existing supervisory efforts. it should also be considered whether international cooperation between supervisory authorities should be strengthened. i believe that the important factor now is for all parties to ensure that no time is lost in putting these recommendations into practice, especially as the macroeconomic and financial setting is not likely to remain as favourable as it is at the moment. at this interim point, ladies and gentlemen, let me take a moment to recount