approach best suited to systematically easing the operational burdens placed on banks and savings banks. and that is why i ’ m also so pleased to see that this debate is gaining momentum and has even given rise to specific projects. in germany, we at the bundesbank have already worked in collaboration with bafin and the federal ministry of finance to draw up a concrete draft. this took place with the close involvement of the relevant associations. the federal ministry of finance is pulling out all the stops to promote the project in the eu, while we at the bundesbank are making the case for the small banking box wherever we can – setting our sights, first and foremost, on our fellow central bankers. the next step needs to be to gain broad support for the project – which, while undoubtedly a challenge, is by no means impossible. i have a clear goal in mind here : a set of rules that makes demands on small banks without placing an unnecessary burden on them. by unnecessary burden, i mean provisions such as farreaching reporting requirements or a framework for rules on remuneration. of course, it will be impossible to fit all of the rules on the back of an envelope – but at least the list of requirements would be much shorter and considerably easier to understand, and complying with the rules would become a much less time - consuming exercise for small institutions. 5. simple, but effective : the small banking box this is what the small banking box sets out to achieve. but what form might this box take? it sounds as though it would be necessary to establish an entirely new set of rules. but it doesn ’ t need to be all that difficult – a separate, short passage in the crr would suffice. the two cornerstones of the box are establishing a definition of those institutions to which a simplified set of rules could apply and, of course, determining the areas in which the rules would be eased. 4 / 6 bis central bankers'speeches let ’ s start by establishing a definition. i previously spoke of a set of rules for small institutions. an initial criterion for determining whether a bank or savings bank would be subject to simplified rules would therefore be a comparatively low level of total assets. a reasonable threshold under which simpler rules could be applied to an institution would be around the low single - digit billion range, although the level at which this threshold should ultimately be set is up for debate for the time being. still, if the threshold were set at total assets of €3

and explicit, and the list just keeps getting longer. we have the guiding principle of the reforms to thank for this : risk - oriented governance and regulation are there to help banks to allocate capital resources as efficiently as possible. but in order to prevent a state of undercapitalisation, this approach needs very specific rules. this increases the compliance workload – that is, the effort associated with meeting the requirements as well as demonstrating that they ’ ve been met. particularly for credit institutions that are able to strongly optimise their employment of capital in order to benefit from higher returns, this is worth all the effort. and it ’ s worth it for especially large credit institutions because they can profit from economies of scale where fixed costs per product fall as the volume of business increases. this then also makes it easier to finance a larger compliance department. smaller, regionally based institutions, however, cannot normally rely on these economies of scale or a strong risk appetite for a source of income. seen from an individual business perspective, the cost of regulation is similar or even higher for these banks, but their ability to take advantage of these complex strategies is somewhat weaker. in other words, the complicated risk - oriented approach favours banks with a large organisation, whose activities are more complex and which take on greater risks. the reason we should be giving this more thought is that the vast majority of german banks and savings banks are smaller institutions ; about 1, 000 credit institutions in germany recorded total assets of less than €1 billion in 2016 ; for a further 500, this figure was somewhere between €1 billion and €5 billion. we therefore need to ask ourselves two questions. how appropriate are the new regulations for smaller, regional banks? and is there any way we can simplify or even get rid of requirements that are out of proportion? 4. regulation : strict, complex and proportional? before i go on to discuss the solutions to these issues, let me first make one thing clear : i do not subscribe to the view that small banks and savings banks are put at a systematic and deliberate disadvantage – and that is because regulation and supervision have been proportionate in many areas for many years already. furthermore, i don ’ t believe that smaller and regional institutions are risk - free per se ; instead, every individual credit institution requires robust regulation for the benefit of all. what this means is that even small market players cannot expect a regulatory free pass – they, too, are not exempt from regulation. what this