reform the regulatory and supervisory framework, as we have done in recent years? see gennaioli, n., schleifer, a., and vishny, r. w. ( 2015 ), “ money doctors ”, journal of finance, vol. 70 ( 1 ), pp. 91 – 114. bis central bankers ’ speeches banks, intermediation and trust let me start by using a simplification of the activities of banks to explain why it is worthwhile investing in regaining trust. traditionally, the core activity of a commercial bank is to take deposits from individuals who have a surplus of resources and to allocate those resources to productive activities. banks thereby perform three main functions. first, they provide payment and settlement services to households, entrepreneurs, companies and other financial institutions. second, they enable savers to reap the full benefits of long - term investments, while still being able to access liquidity when needed. third, they assess and monitor the creditworthiness and payment behaviour of borrowers more efficiently than an individual investor could. through these activities, banks reduce the inefficiencies caused by asymmetric information and incentive problems between those who save and those who borrow. it is mainly via this channel, that banks create value and contribute to economic growth. however, even though banks assess and monitor borrowers ’ creditworthiness, savers may still be concerned about whether banks – and their managements – have the necessary skills and will make the required effort to protect their savings. asymmetric information and incentive problems are still present, but arise at new, different levels : no longer between savers and borrowers, but between savers, bankers and supervisors. in the relationship between banks and their creditors, incentive conflicts may arise between managers on one side ( who set the bank ’ s strategy, make investment decisions and monitor the performance of investment projects and the payment behaviour of debtors ) and shareholders and debt holders on the other side ( who provide the bank ’ s funding and who bear the ultimate risks and receive the benefits of the bank ’ s activities ). information problems may also occur among banks that are linked by mutual business relationships or collective vulnerabilities to systemic events. asymmetric information and incentive problems can be addressed through contracts, institutions and appropriate regulatory and supervisory frameworks. but this is a rather abstract and idealised view. in reality, more is needed : trust is needed. the medical analogy is a handy way to

central bankers ’ speeches banking sector requires the active engagement of bankers and their stakeholders. regulatory and supervisory reforms are necessary, but not sufficient to restore people ’ s trust in banks. my view is that, while regulatory reform and supervisory action were certainly necessary to lay the foundations on which banks can restore trust, regulators and supervisors are not the key players in this process. the main effort to regain trust must come from bankers, in particular from banks ’ management and their boards as the tone from the top as well as the accountability of banks ’ top management are key for risk culture and staff ’ s behaviour. without their active effort, society will not start to trust again. the necessary process will be laborious and time - consuming ; and it will not be one measure or action that does the job, but rather a complex mixture of governance, risk appetite, risk culture and behaviour from the top. the role of banks and their stakeholders in restoring trust so what must bankers do to rebuild trust? first, bank ’ s management should develop viable business models with a clear long - term perspective. many of the recent crises have been the consequence of banks targeting high, but risky, short - term gains rather than pursuing lower, but more stable, long - term returns. banks should refocus on their core functions : • providing valuable investment opportunities to savers, while shielding them from liquidity risk, and • providing funds to those who need them, while assessing and monitoring their creditworthiness. financial intermediation is not simply a way to garner revenues ; it also supports economic growth and thus, ultimately, provides an important service to society. significant changes in the economic environment in recent decades have diverted banks from these core functions. it seems that the combination of an increased range of investment opportunities and funding sources, a trend towards more liberal regulation, and an increasingly competitive environment caused banks to reshuffle their priorities towards maximising short - term corporate and often also personal gain. the change in banks ’ business models from “ originate to hold ” to “ originate to repackage and sell ”, which was the proverbial spark in the tinder box that set off the financial crisis, can be seen as a prime example of losing sight of the goal of maximising long - term value. second, a bank ’ s management and board must have a sense of responsibility for developing the bank ’ s individual risk culture, thus enabling it to deal with risk in a way that supports this long - term business perspective and