Swiss central bank President Philipp Hildebrand comments on banking regulation during a panel discussion in Berlin today.
On the Swiss National Bank’s legal mandate:
“The SNB’s mandate says we are to contribute to financial stability. In other words, we currently have no formal competence in the area of banking supervision.”
On the need for a broader mandate for the SNB:
“We clearly feel the need for the financial-stability arsenal of the SNB to be enhanced. It should be geared toward augmenting the resilience of the banking system and moderating its pro-cyclical behavior.
‘‘Given its inevitable role as a lender of last resort, the SNB will play an active role in combating the financial crisis. The SNB should play a role in reducing the probability of a crisis emerging in the first place. Here, macro-prudential supervision, which is at the interface between micro-prudential supervision and monetary policy, has a key role to play.
‘‘In order to play that role, the formal legal competence of the SNB in the area of prevention needs to be enhanced carefully. We are working very actively at the moment with the government, parliament and Finma to achieve that objective.’’
On the tasks the SNB should handle:
‘‘This enhanced competence should ultimately build on two pillars. First, the SNB should have independent access to the bank data that is essential for conducting ongoing and appropriate financial-stability valuation. The inability today to collect and independently assess data from the systemically relevant banks was a key weakness in our ability to work preemptively in the run-up to the peak of the financial crisis in 2008 and 2009.
‘‘Secondly, we feel we should have a more formal role to play in proposing or deciding on regulation that clearly impacts financial stability. To be specific here, we are not suggesting that we have a voice in all regulation, but in the regulation that will have a direct bearing on financial stability. Specifically, it should be the SNB’s responsibility to mandate a countercyclical capital buffer as it has been set out in Basel III.’’