regulation as a burden. why do we have strict rules and close supervision if they seem to cause so much trouble for banks and savings banks? no one can seriously argue with the fact that regulation and supervision present a challenge for institutions. rules are restrictive, and there are costs associated with obeying them. and this burden has become even greater thanks to the reforms since the last financial crisis. wouldn't it be better for banks to focus all their energy on financing the real economy instead of wasting their time trying to follow complicated rules? after all, the services of banks and savings banks are crucial for a stable economic cycle, for growth and prosperity. especially in bank - based economies in germany and europe, businesses and consumers depend on a functioning banking system. banks and savings banks fund investments, they manage savings and deliver important services, such as processing 1 / 4 bis central bankers'speeches payments. but taking risks is also part of the banking business. and when you take risks, there's a chance you might fail. plus, we have to remember that bankers are only human – and humans make mistakes. i guess given the increasing digitalisation in today's world, another point to add is that algorithms are just that – algorithms – and algorithms can be wrong. this is why the area of it risks, in particular, is also worthy of so much attention these days. the implications of a financial institution's failure are far - reaching – and i don't just mean for the institution itself, but also for its investors, for the real economy, and for us all. the financial crisis, which is just about to reach its tenth anniversary, has shown us that the failure of a single institution is on its own enough to trigger a chain reaction throughout the entire sector. and that's why we need rules – even in the places they cause the most pain. regulation and supervision help to keep the financial system in order. smart regulation ensures that financial institutions can still pursue their business, but that they are appropriately protected against the biggest risks. this then safeguards the economy, consumers and the financial system itself against turbulence. therefore, the reason we can't give banks and savings banks full rein is because of the important part they play in the economic cycle. smart regulation and close supervision are also desirable from the banks'and savings banks'point of view, as they prevent cost - intensive threats to their existence. there are more advantages for the sector as a whole. on the one hand

shall have the three new “ authorities ” and a crosssectoral committee with specific tasks in fostering convergence of supervisory rules and practices in europe, whereas the national supervisors are to remain responsible for ongoing supervision. experience of the crisis indicates that strengthening supervisory coordination is crucial in dealing with the current problems and helping to restore confidence. the objectives of the new framework, according to the ecofin / european council, are to upgrade the quality and consistency of national supervisors ; to strengthen supervision of cross - border groups, in particular, by setting up supervisory colleges for all major eu financial groups and by moving towards a single rule book. the ecofin and the european council also stipulate that the activities or decisions of the new authorities should not impinge on the fiscal responsibilities of the member states and that any binding decision by the new authorities or the commission must be subject to community courts. these key messages from the ecofin conclusions match perfectly with what might be considered to be the “ success factors ” of the new framework. due account should be taken of these when discussing and deciding the details : continuation of a cooperative working style within what should be an operational network rather than a centralised supervisory system. the envisaged binding powers of the new authorities in relation to the national supervisors should be interpreted as a means of speeding up the process of convergence and of strengthening the supervisory system, not as a sign of a hierarchy. it should not be forgotten that the decision - making bodies of the new authorities comprise the national supervisors. in this context, i do not agree with the proposed possibility of decisions taken by the new authorities being communicated directly to financial institutions. i do not want to get into a discussion on fundamental legal issues. however, even from a political perspective or with regard to a possible response on the part of the general public, it is important that one should refrain from direct intervention vis - a - vis financial institutions. communication with the institutions in such matters is solely the responsibility of the competent supervisors. there was a political consensus to upgrade the three committees to authorities with specific powers, including some binding powers over the national supervisors. however, the current commission proposal goes further, giving the three authorities direct powers to take decisions that affect the industry. apart from the legal issues this raises, this approach risks establishing a parallel system of national responsibility – which, incidentally, ecofin is in favour of maintaining –, and decisions from a supra - national authority. taking due account of the fundamental principles of subsidia