The Importance of Financial Services in the International Context: Challenges for Stability*

The financial services industry is one that is being transformed by technological advances and structural change. The consolidation of financial services – so-called ‘Allinance’ or ‘Bancassurance’ activities – is one example of these trends. The financial services industry is of crucial importance for the Swiss economy, representing more than 10 per cent of GDP. It thus contributes substantially to prosperity in our country. And it helps create good operating conditions for industry: I am thinking of low interest rates, a stable currency, and excellent financial services. Switzerland therefore has every interest in providing and maintaining a favourable business environment for providers of financial services on a global scale. This requires a continual examination of the appropriateness of our legal and institutional framework.The aim of this paper is to underline the importance of the financial services industry for the Swiss economy. It also aims to acknowledge that, like Swiss multinationals in other sectors, Swiss financial services firms are, or are aspiring to become, major global players. I will therefore try to link my own thoughts with the ongoing international discussions on the economic and regulatory challenges of global finance. I will first outline what I consider to be the main ingredients for a successful financial centre – a stability-oriented strategy that has proved successful for Switzerland. In a second part I will discuss some of the challenges to financial stability arising from the increasingly internationally integrated financial markets. Lastly, I will address regulatory aspects, including efforts underway to reduce potential risk to stability. The Geneva Papers on Risk and Insurance (2001) 26, 37–43. doi:10.1111/1468-0440.00092