The financial industry, in general, and a healthy and stable banking sector, in particular, are of vital interest for the Swiss National Bank (SNB) and Switzerland. First, the banking sector plays a crucial part in the transmission of monetary policy due to its key financial intermediary role in the economy. Second, the financial industry contributes substantially to the wealth of our country. But the banking sector can also propagate shocks to the rest of the economy, which are potentially large because of the size and the international orientation of the financial industry. Therefore, it is a major challenge for Switzerland as a financial centre to make sure the banking sector is resilient so it can cushion shocks.

The Swiss financial industry will itself have to cope with several challenges. First, in wealth management, revenues will continue to be depressed. Competition will intensify, and wealth management will have to adapt to changing international standards. Second, a further build-up of imbalances in the residential real estate market could be followed by a significant price correction. Furthermore, the systemically important banks have to adapt to new supervisory requirements that address "too big to fail" issues. A great deal has been achieved in strengthening the resilience of the banking system by mitigating systemic risks already. One important achievement is the countercyclical capital buffer. This flexible instrument increases the loss absorbing capacity of the banking system and helps to lean against the build-up of excesses.

An independent, stability-driven central bank is a necessary condition for a competitive and vibrant financial centre. This condition, however, is far from being sufficient. What are also needed are banks who are able to draw the appropriate conclusions and to change course in time - a capability Swiss bankers have demonstrated throughout history.