Since last year's meeting, the World has changed profoundly. Although this crisis has arisen outside the Bank's region, its countries of operation have been considerably affected, in line with their position in an increasingly interdependent and globalized world.

This situation requires unprecedented action. While Governments must take the lead in mitigating the impact of the crisis on their economies, they must be supported by international organisations such as EBRD. But the multiple dimensions and consequences of the crisis crucially illustrate the limits of individual action and call for close cooperation at all levels.

More than ever, a strong multilateral system is needed to catalyze political will and financial resources to deal with the present threats. In this context, the discussion by Governors at this Annual Meeting, in particular concerning the post crisis and medium term future of the Bank, is timely.

Addressing the consequences of the financial and economic crisis in Eastern Europe
EBRD countries of operation are all affected to various degrees by a crisis. It highlights remaining vulnerabilities such as those stemming from unbalanced growth, particularly in the financial sector, as well as from important remaining transition gaps in regulatory and framework conditions. Rather than calling into question the global framework of open and market oriented economies, the crisis serves to identify the problems that need to be addressed to allow for an improved market economy and a more sustainable international framework. The objective is that the region will emerge from this crisis stronger than it was before. 

EBRD contributes to this objective through its crisis response. Over its lifetime, the Bank has been highly successful in supporting the development of a market economy in its countries of operation through targeted private sector projects, the deepening and strengthening of the financial sector as well as the promotion of private and commercial approaches in infrastructure. Its proven track record, its vast know-how and experience as well as its culture of innovation qualifies it to provide a clear, focused and strong support to the private sector in its countries of operation during this crisis. We support therefore the robust response of the Bank that immediately followed the outbreak of the financial crisis. 

But, just as the Bank cannot itself set the pace of "transition", it cannot alone prevent the negative consequences of an economic downturn. Therefore, we urge the Bank to remain focussed, to select priorities where its leverage and track record is the best and to develop the means to ensure broad demonstration effects and lesson learning. The Bank's actions have to be effective, efficient and subsidiary, upholding the Bank's principles of "sound banking", "additionality" and "transition impact". The recent closer coordination with other multilateral actors (e.g. Joint IFI initiative) is welcome and it must be further deepened, and expanded to include bilateral partners.

The deteriorating environment as well as the role to be played by the Bank in the crisis context inevitably implies more risks to the Bank's operations. We strongly support the Bank in its constant, broad and forward-looking efforts to monitor and proactively manage these risks as the Bank can only respond to these new challenges and continue its mandate if it can ensure its financial solidity and viability over time. Furthermore, it is essential that, despite a sense of emergency and the related pressure on the personnel of the Bank, the debate takes place within the institution's governance framework and that the board is informed and consulted in a timely manner.

About the use of the Bank resources
The Bank has been for some years operating at a level beyond the one initially forecasted within CRR3. The current crisis response is accelerating this trend. The potential for further expanding capacity is largely exhausted and the Bank has to pay close attention to its existing capital base. Within its capital constraint, the Bank needs to set clear priorities and to look for maximum impact and demonstration effect.

We welcome the forthcoming discussion on capital adequacy in the context of the preparations for the Bank's Fourth Capital Resources Review. However, these capital adequacy discussions will have to take both demand and supply side considerations into account. The analysis should include a scenario outlaying the Bank's business capacity on the basis of its current capitalization and the assumption that, once the crisis is over, the Bank will return to a business volume which is sustainable under the existing capitalization.

Strategic directions of the EBRD
We continue to believe that the Bank's core mandate should be driven by its founding Articles which should remain at the heart of the Bank's activities. Switzerland supports EBRD's vision of its transition mandate based on its core competencies and focusing on areas where it has a strong track record and a comparative advantage. The focus should be on deepening its current competencies rather than broadening its activities into new areas.

We support the Bank's proposal to "shift away from measuring transition incrementally by transaction". In our view the Bank should identify "quantifiable" priority transition objectives where it can have a significant global and measurable transition impact over the CRR4 period. Within the Bank's transition mandate and the existing direction to move further East and South, Switzerland proposes three key transition objectives for the CRR4 period:  

a high-quality financial sector and strong financial intermediaries to support the development of the private sector, SMEs and the financing of infrastructure.
improved energy efficiency throughout infrastructure and private sector investments. We hope such a priority is shared by regional stakeholders and can be integrated as a full-fledged "transition objective".
better governance at micro and macro levels. We support the definition of preconditions for intervention at country, sector and project levels.  We also trust that the ownership of and commitment to framework condition improvements on the side of the countries of operation will be reinforced as an outcome of the current crisis.

The Bank has been successful in delivering technical assistance and conducting policy dialogue with a sharp focus on its operational activities. The Bank together with the donors needs to be able to ensure sufficient funding is in place for the provision of project related technical assistance. In addition, it should seek increased cooperation with institutions having a clear comparative advantage in the field of policy dialogue or take advantage of existing thematic funding sources for technical assistance (e.g. FIRST for support to financial sector regulation or PPIAF for public-private infrastructure frameworks) rather than expand its own technical assistance into this area.

In our view, the Bank is to remain a project-based institution. But, we recommend the Bank increasingly identifies and disseminates lessons learned, replicable models and best practices from its operations at country, sector and instrument levels. The objective is to maximize leverage and demonstration effect beyond the scope of individual projects and thereby contributing to an increased crisis resistance and an accelerated pace of transition of the Bank's countries of operation.

On behalf of Switzerland