The global financial crisis highlighted the fact that policymakers have underestimated the importance of systemic risk in the financial sector. Five years later, our understanding of the nature of systemic risk has improved, and macroprudential measures to contain it are being designed and implemented. Overall, these measures aim to increase the resilience of the financial system to adverse shocks and to preventively contain the build-up of systemic risk.

Switzerland is well advanced in introducing this kind of macroprudential approach to financial regulation. The implementation of measures to address the «too big to fail» problem, which is particularly acute in Switzerland, is under way. Also, to address the cyclical risk arising from imbalances in the Swiss real estate and mortage market, a countercyclical capital buffer has been activated, and took effect on 30 September 2013.

This progress notwithstanding, our journey towards a more resilient financial system is far from over. To further increase the resilience of the two big banks and make orderly resolution of a distressed bank possible, full implementation of the «too big to fail» package is indispensable. In particular, banks must fully and consistently implement the tighter capital and liquidity requirements as planned, improve the transparency and reliability of their own risk assessment models and continue their work of drafting recovery and resolution plans. In addition, close coordination among regulators across borders is necessary. Specifically, regulators must ensure that resolution measures for global banks ordered by one authority are mutually recognised.

On the cyclical front, there is substantial uncertainty on where exactly we are in the credit cycle. Together with persistent imbalances in the real estate and mortgage market, this calls for prudence on the part of all actors. Banks should apply conservative lending criteria, borrowers should bear in mind that rising house prices and low interest rates cannot continue indefinitely, and regulators must continue to monitor the situation closely and be ready to take further action if needed.