sustain heavy losses under the extreme scenario : the result would be a drop in their cet1 ratio of 0. 9 percentage points. in this case, the small and medium - sized german banks and savings banks would have to raise additional capital of around €12 billion in order to lift their cet1 ratio back to its original level. and even under the somewhat less dramatic, adverse scenario, the cet1 ratio would still fall by 0. 5 percentage points. here, capital would have to be topped up to the tune of €5. 6 billion. 7 so you see, the risks stemming from the residential mortgage market are relevant for banks. what is more, taking contagion into account would intensify the impact considerably. we see signs of growing competition to secure mortgage loan business in the low - interest rate environment. nevertheless, the stress test shows that banks need to look closely at how well they would be able to cope with the associated risks in the event of a crisis. the message to banks and savings banks, then, is that they ought to make provisions if they want to stay healthy in the long term – that is and remains, without a doubt, the best medicine. 1 while institutions are continuing to make allowances for risk by stocking up the fund for general banking risks ( pursuant to section 340g of the german commercial code ), they are planning to set aside roughly 6. 1 billion euro less altogether between 2017 and 2021. 2 the individual scenarios are as follows. the blue bar shows the banks ’ own p & l projections. the dark blue line continues the current interest rate level. it is based on a constant yield curve and the balance sheet as at 31 december 2016. the green line depicts the positive interest rate shock scenario, in which the assumption of an unchanged balance sheet is retained. however, it is assumed that interest rates rise by 200 basis points across all maturities – in other words, there is a parallel upward shift in the yield curve. the red lines, meanwhile, show the negative interest rate shock scenario in which rates drop by 100 basis points and 5 / 6 bis central bankers'speeches institutions are allowed ( solid line ) and not allowed ( dotted line ) to respond by adjusting their balance sheets. 3 the cet1 ratio is defined as the ratio of cet1 capital to risk - weighted assets. 4 developments in the total capital ratio point in much the same direction : this ratio will decline overall from 18. 3 % to 17

faces the challenge of adapting to the new context. our primary goal should be to ensure ease of access to european markets and infrastructure for our firms and intermediaries. we need to reflect together on the best way to achieve this. the integration of securities clearing and settlement systems has not yet reached a satisfactory level owing to differences in national infrastructures that predated the launch of the monetary union. the existence of numerous national systems, with their non - standard services, diverse market practices and different laws and tax rules, increases the risks and costs of settling cross - border transactions. some specific barriers to integrating post - trading systems have been clearly identified. the removal of those created by differences in laws and regulations will require sometimes complex legislative intervention. the removal of strictly technical barriers and barriers created by market practices can be effected at the initiative of market operators themselves. there is no reason to wait. a set of european rules is already in place to promote market integration and transparency by regulating such matters as settlement finality, market abuse, collateral, prospectuses and takeover bids. the directive on markets in financial instruments issued in april 2004 will spur competition by abolishing the requirement to conduct all transactions on regulated markets, encourage the provision of crossborder financial services and strengthen investor protection. the complex process of implementing the directive must be speeded up, at both community and national level. 4. the role of intermediaries in asset management the saving rate of the italian economy, especially among households, is still high, despite a long - term downward trend. it is associated with a level of household wealth that is also high. savings continue to be a fundamental resource for economic growth. efficient management of the country ’ s savings is a competitive challenge and an opportunity for growth, both of the economy as a whole and of the financial industry. in italy as elsewhere the composition of households ’ financial wealth has shifted in the last few years, as a result of more active, diversified and efficient portfolio management. between 1995 and 2004 the share of bank and postal deposits fell from more than 40 per cent to barely 25 per cent and that of publicsector securities from 23 to 7 per cent, while the incidence of private - sector bonds, equities and investment fund units increased. fund units are now as important as in the other leading industrial countries. the share of insurance products and private pension funds is much smaller, however, essentially because of the broad coverage provided by the public pension system. the share of private -