levelling - out of the de - stocking cycle. • there are several factors, in the euro zone as well as in other major economies, that point to a fairly benign outlook and that make a double - dip recession very unlikely : • an important part of economic policy stimuli is still in the pipeline for 2010. • the improvement in confidence, not the least on the financial markets, is increasingly being supported by hard facts. the task of monetary policy - makers has become a little easier because deflationary fears as a result of the massive correction on the commodities markets in combination with deteriorating economic conditions have all but disappeared in recent months, while inflation risks are still very limited or non - existent in the short run. however, forecast risks are still elevated, and there is no reason to be overly optimistic given the fragility of the recovery and the existence of important downside risks such as a foreseeable deterioration in labour market conditions and the second - round effects that the crisis is likely to have on bank balance sheets due to the recession. although i expect a global recovery across the major world regions by 2010, the pace of growth should be much more moderate than in the past. in particular, it is not realistic to expect a speedy return to pre - crisis trend levels of output. on the financial markets, optimism seems to be even more widespread : market conditions as measured by stock prices, spreads and bond yields have improved significantly in recent months, in fact even more so than the real economy, but the situation is still fragile and temporary backlashes are likely. this is because the stabilisation is due not only to betterthan - expected macroeconomic developments and a levelling - off of risk aversion, but also to unprecedented stabilisation measures by governments and central banks, which cannot be maintained forever. in addition, banks are still exhibiting some weaknesses, and some risks to corporate earnings are going to materialise over the coming months. this, combined with ongoing high levels of uncertainty and volatility on financial markets, also make exuberant forecasts inadvisable. lessons learnt and still to be learnt from the crisis still, it is safe to say that we have overcome the worst. this makes it all the more pressing to reach an international agreement on the reforms to be implemented in the financial sector to make the whole system more resilient to shocks and less prone to aberrations such as those that led to the current crisis. the dire consequences of the crisis

/ 4 bis central bankers'speeches requirements. the basel committee would also benefit from such a dedicated rulebook for banks operating internationally. if the 28 member states knew that the fully loaded basel standards were only applicable to large, internationally active banks, we wouldn't have to worry any more about detailed national exemptions, but could instead devote our entire energy to the key task : standards for large, internationally active banks. i feel very much that brussels and basel should examine this approach with an open mind. such a systematic approach to relieving the burden on smaller institutions, to the extent that it is deliverable, is generally superior to a patchwork of exemptions. in this connection, i am very eager to open up a dialogue with the banking community. to this end, a joint working group was recently established, comprising delegates from the federal ministry of finance, the bundesbank, bafin and the central associations of the german banking industry, in order to develop proposals along these lines. 5. conclusion ladies and gentlemen, the implementation of basel iii will impose further demands on banks and savings banks - but i think that less time and effort will be required than many currently fear. with regard to the implementation of reforms, two things are of paramount importance to me. under no circumstances must we water down what has been achieved since the financial crisis ; rather, we must maintain a robust regime of rules. that said, a one - size - fits - all approach will not do justice to the banking landscape. one of the objectives guiding the actions taken to finalise the agenda of reforms in europe should therefore be to lessen the operational burdens on small, low - risk institutions - ie to make the final regulatory regime more granular. the objective must not be to erode minimum capital requirements and thereby open a new gateway for stability problems. instead, it is about reducing operational burdens on small institutions without hollowing out capital and liquidity requirements. this, ladies and gentlemen, is how we can secure a diverse, successful and, above all, stable financial sector - to serve the german economy. thank you very much for your attention. 1 see a dombret ( 2016 ), banking regulation and diversity – do we need more proportionality in banking regulation? speech delivered at the banking industry conference of the people's banks and raiffeisen banks in berlin, 8 june 2016. 2 special treatment for exposures to small and medium - sized enterprises ( smes ) provided for under the