By Neil MacLucas
BERN, Switzerland--The key issue for Switzerland's banking
industry remains the threat posed to the country's economy by a
potential failure of its two biggest banks, UBS AG and Credit
Suisse Group AG, Swiss National Bank President Thomas Jordan said
Tuesday.
While the risks stemming from the boom in the Swiss real estate
and mortgage markets are the present focus of public interest, "the
most decisive factor for the long-term importance of the Swiss
banking center is the alleviation of the 'too big to fail' issue,"
Mr. Jordan said in comments prepared for delivery at a business
conference.
"Only if this can be done, will it be possible to provide a home
to international banks in Switzerland in the long term," he
said.
The ongoing regulatory efforts to boost the banks' capital and
liquidity positions are making good progress, "however we haven't
yet achieved our objective," Mr. Jordan said.
Switzerland's stable political and economic conditions provide
an incentive for investment in the country's banks, he said.
Mr. Jordan said that Swiss banks had to assume that traditional
bank secrecy in cross-border operations will eventually be replaced
by the automatic exchange of tax data between different countries,
as proposed by the Organization for Economic Cooperation and
Development.
"However, for honest taxpaying customers, protection of privacy
and the associated legal certainty remains a legitimate concern,
even under the OECD standard," Mr. Jordan said.
The chances of Switzerland, as a small country, being able to
host an international banking center will depend on a mix of
different kinds of banks, and "both smaller, regional banks and
larger, international banks will be needed in future," Mr. Jordan
said.
Write to Neil MacLucas at neil.maclucas@wsj.com