their traditional business model, rode out the crisis years well. another element in the realignment of business models is the rethinking of remuneration practice in the financial sector. there is no disputing that mismanaged remuneration systems helped cause the crisis. remuneration in the financial sector needs to be brought back into line with the risk entailed in business activities, and needs absolutely to be based on a financial institution ’ s creation of lasting value, rather than on rapidly pumping up earnings. banks must prove through their business models that they are trustworthy, and their remuneration culture is the litmus test for this – whether they like it or not. from the point of view of financial stability, it is the structure of remuneration which requires reform rather than the amounts involved. however, it is also clear that the amount of remuneration received has to be adapted to lower medium to long - term earnings in the financial sector. thus, the efforts to establish a sustainable remuneration culture in harmony with the goal of financial stability must not be allowed to wane. it is good to note in this connection that remuneration systems and principles of good governance are now receiving increased attention from shareholders. they have been impressively active in the votes on remuneration reports at the agms of a number of european and us banks in recent months. clearly, the era of the sound, trustworthy, respected banker is actually not quite over. or at least it is coming back into fashion. conclusion : banks and trust to sum up : banks mainly have to earn trust themselves. and that is hard work, admittedly. the banks need to strengthen their capital base and adjust in timely fashion to the new basel iii requirements. and the banks have to gear their portfolios more towards the needs of private households and enterprises and less towards government financing. we regulators also have to ask ourselves searching questions about whether regulatory privileges for governments are still appropriate. at the end of the day, only this can permanently loosen the knot between the sovereign debt crisis and the banking sector. a lot has already been set in train. but the banks cannot rest yet. trust, after all, is a scarce resource which needs to be managed carefully. trust needs to be sought anew each day, both with customers and with the public. without trust, without “ credit ”, banking cannot function. the media and politicians have a responsibility here, too, in not undermining

what helps exports are the structural reforms countries are implementing, not an artificial price decrease through the exchange rate. so, our goal at the eurosystem is not to foster exports by manipulating the exchange rate. what could germany do to help rebalance the euro area? a rebalancing is already taking place : the current account surplus has halved from 2007 to 2011, and what we are seeing now is to some extent a reversal of the pre - crisis situation. in the first decade of monetary union, germany embarked on structural reforms and wage moderation. now in germany we have above - average growth rates, employment is the highest we ’ ve ever seen, and effective wages are increasing faster than in the past 20 years. this will translate into purchasing power and help rebalance the current account. but we are not living on an island. our main competitors – like the us and china or other emerging economies – are outside the euro area, so that it is very important that europe as a whole becomes more competitive. are you not afraid of a very high inflation of 5 – 6 % and high wage increases? in the short term we may even see declining inflation rates because of falling energy prices. if germany ’ s economy continues to gather steam, we might see above - average inflation rates as we have seen below - average rates in the past. but we are talking about decimal points here. in the governing council we ensure price stability for the euro area as a whole. this precludes runaway inflation in germany as the german economy accounts for the biggest share of the euro area aggregate. apart from the political union there is a banking union which is waiting to be discussed at the end of june. what do you think of the three points : a paneuropean supervision, a deposit guarantee fund and a banking restructuring fund? the commission has put forward a proposal, are you satisfied with this proposal? i welcome the bank resolution proposal of the commission which still needs a lot of debate, because it is very technical and very complicated. but over and above that, there are the issues of common regulation and common supervision ; and there are two elements which imply common liabilities : a common deposit insurance scheme and a common restructuring fund. these are areas in which we currently have a national fiscal responsibility. if we were to mutualise liabilities in these areas, we would face the same questions regarding liability and control as in a fiscal union. but not for now? there is the question of balance between control