##tech players. lastly, basel iii presented a very special challenge for me – i fought on the front lines for many years in the interests of banking stability, and you can take it from me that i had my eyes firmly set on what was best for germany. and i hope that the reforms will now indeed be implemented in a proportionate manner for smaller institutions. that was something which i, for one, supported from the very outset, and i would say we are on the right path. negotiating and extending the imf ’ s bilateral borrowing agreements, adding the yen, australian dollar and renminbi as reserve currencies, expanding the bundesbank ’ s risk control capacities, and establishing the “ house of microdata ” in the bank ’ s directorate general statistics also feature in my track record over the past eight years. and if you find one or the other sculpture here on the bank ’ s grounds aesthetically pleasing or displeasing, the chances are that ’ s another thing i will have to take responsibility for. one final important issue, i found, was to highlight the climate risks lurking on bank balance sheets as a direct impact of climate change and to call for change. hence our decision to dedicate this year ’ s annual banking supervision symposium in its entirety to the topic of climate change and sustainable banking – and a large majority of the participants hailed it as a resounding success. it goes without saying that there is still some unfinished business on my desk after eight years in office. first, i would dearly have loved to install a regulatory sandbox in germany as a way of nurturing and learning from the fintech sector – but not everyone in germany backed that initiative. second, i would have liked to have done more to harmonise financial reporting standards ; i ’ m sad to say that the ifrs and us gaap today are further apart than they were in 2010. third, there is the matter of the regulatory treatment of government bonds – an international accord on this topic has now become a rather distant prospect, much to my regret. but giving up is out of the question. and lastly, risks at the bundesbank have increased dramatically over the past years as a result of both the asset purchase programmes and the recent rise in interest rate risk. in a clear sign of heightened risk, we have had to add €14. 5 billion to our provisions for general risks since i took over responsibility for the bundesbank ’ s risk control function. if

based on full implementation of the basel iii rules, which will apply from 2018 onwards. what this shows not least is : german banks cannot afford to stand still. last but not least, germany also has a some catching - up to do with regard to the leverage ratio. although this non - risk - weighted capital ratio has improved in recent months – 20 of the german banks that participated in the comprehensive assessment are already compliant with the 3 % leverage ratio figure, which will be in effect from 2018 onwards – german banks are still performing relatively poorly by international standards. bis central bankers ’ speeches 3. low - interest - rate environment and weak earnings : the situation of germany ’ s banks let us now analyse the current situation of the german banking sector. in addition to a high level of resilience – as confirmed by the comprehensive assessment – banks also need, not least, to be successful in terms of sustainable profitability in order to be able to hold their own in the market in the long run. so what can we ascertain from banks ’ earnings situation? let us take a look at something of vital importance to german banks : interest income. this continues to be characterised by the ongoing phase of low interest rates. german banks ’ business models rely strongly on interest income, relatively speaking. when interest rates are low, this naturally puts pressure on earnings. for instance, in the first half of this year, the operating income of 11 german banks with an international focus was roughly 8 % down year - on - year. this decline was largely driven by falling net interest income and a drop in net trading income. viewed in relation to the german banking system as a whole, the impact of low interest rates currently remains limited. savings banks and credit cooperatives, in particular, managed to bolster net interest income by increasing lending business volumes. however, if interest rates remain at current levels for the foreseeable future, the pressure on earnings will intensify further : maturing higher - yielding loans would then have to be rolled over into lower - yielding loans. as it is almost impossible to lower deposit rates any further in many cases, it could be worth considering expanding lending business to counter the fall in net interest income. a protracted period of low interest rates, moreover, could spark a greater risk appetite among low - earning institutions, in particular. furthermore, a cross - sectional analysis of german institutions reveals a high degree of synchronisation with regard to interest rate risk. the bundesbank