financial system more transparent. this part of the reform process is being dealt with by the fsb. major topics on its agenda are the handling of systemically important financial institutions and the “ too - big - too - fail ” problem, resolution regimes, the role of rating agencies, harmonising accounting standards, and rolling back trading in otc derivatives. even though these issues seem to have attracted less attention than basel iii, i am confident that we shall see significant progress in this area by the time of the g20 meeting in november as well. once implemented, the reforms at the microprudential and the macroprudential levels will have a profound impact on the financial system, increasing its resilience and hence its stability significantly. but, going back to what i said earlier, do the reforms also strike the right balance between stability and growth? i am certain they do. true, the development of the new basel iii proposals has been accompanied by concerns that such tighter regulation might have a negative impact on economic performance by severely restricting access to credit. several studies on the potential effects of the new regulatory requirements on the economy have been published recently. a comprehensive cost - benefit analysis has revealed that such fears of a significant negative impact on growth are unfounded. this is all the more the case given that there will be the transition period before the new requirements enter fully into force, which will give banks sufficient time to strengthen their capital base. this favourable overall assessment of the macroeconomic impact of well - designed regulatory reform highlights the fact that there is no inherent conflict between the g20 agenda ’ s objectives of a more stable financial system and of ensuring strong and sustainable growth. and, in terms of the general future outlook for growth, we should bear in mind that the financial crisis has not impaired major drivers of growth. emerging markets, for instance, will still make great efforts to catch up, and technical progress will continue. thus, the crisis certainly does not mark the end of economic growth. rather, what it has done is highlight the importance of sustainable growth and the need for supportive policies – in financial regulation, but also in many other policy areas. 4. conclusion ladies and gentlemen, the events and implications of the current financial crisis have clearly demonstrated how vulnerable our financial system has been. the necessity of reform cannot be denied, financial stability has to and will be reinforced. however, as said earlier, enhancing financial stability is not an end in itself nor is it an obstacle to growth. rather, it

##isation will always be constrained by the political and legal backdrop in the relevant jurisdiction. and in europe, we must concede that an ideal world of a fiscal or political union is still some way off, which means that complete harmonisation remains out of reach. ever since the eu came into being, european integration has proceeded step by step. the next step towards greater european integration was always dictated by what was feasible at the given time. these are the circumstances which all harmonisation projects in europe need to come to terms with. bis central bankers ’ speeches 3. implications for supervisors and banks but what does all i have said about a supervisory level playing field in europe mean for supervisors and banks? let ’ s begin with the supervisors : the introduction of european supervision is an extremely exciting challenge. ever since our national supervisors began taking part in the joint supervisory teams overseeing significant banks, our tasks and perspectives have been broadened substantially. alongside our work in the joint supervisory teams, we, as national supervisors, are still responsible for overseeing the remaining 1, 800 german credit institutions that are not supervised by the ssm. i am sure that our national supervision will also benefit from the insights we gain from working in the joint european teams. but, for all the benefits it offers, european supervision also means more competition for us as national supervisors – as i mentioned earlier on, the ssm supervisory standards will be developed by cherry - picking best practices from national approaches to banking supervision. and this is precisely where we are challenged to deliver our best practices and strategies in the prudential field. banks, too, will certainly feel the impact of the new european level playing field in supervision. first and foremost, the ssm banks will realise that they now operate in a more competitive environment spanning across europe. but also non - ssm banks, the so - called less significant institutions, or lsis, will notice changes based on ssm supervision. even though their supervisor is still the national competent authority – here in germany, bafin and bundesbank work together in this role – the ssm environment will also influence the supervision of lsis. the lsi sector as a whole will be overseen by the ecb when it comes to risk concentration. furthermore, the ecb may also put forward recommendations and standards for lsi supervision. therefore, i expect a harmonisation of supervisory practices for both ssm - and non - ssm banks. this will contribute to the supervisory level playing field in europe and fuel greater competition among