andreas dombret : can we manage with less? the debate on greater proportionality in regulation presentation by dr andreas dombret, member of the executive board of the deutsche bundesbank, to board members of baden - wurttemberg savings banks, stuttgart, 24 april 2017. * * * 1 introduction dr herrmann, ladies and gentlemen banks and savings banks have come under fire in the media again recently. referring to " shock charges ", " fee stings " and " piggish banks ", it was as if the big daily newspapers were trying to outdo each other with their headlines. the reason? more and more banks and savings banks are introducing fees for services that were previously free – and they're becoming more open about it too. these new fee structures have come about as a result of the banks'quest to find new sources of income. to a certain extent, it's entirely legitimate to do this – after all, banks need to make money somehow. and we consumers need to get used to the idea that we'll be paying for banking services in future because as we've been told, the " culture of freebies " is coming to an end. the thing is, other sources of income that banks and savings banks could rely on in the past are drying up. in today's low - interest - rate environment, interest gains, which are so important to many institutions, are not as plentiful as they once were. and even after the period of low interest rates finally comes to its long - awaited end, danger will still be lurking in the form of interest rate risk. but it's not just interest rates that are causing banks and savings banks headaches. even though most institutions would probably put the interest - rate environment at the top of their list of pressing problems, i expect regulation would not be much further down. regulation is also the topic of my talk today – that's what i agreed with the organisers. many institutions see regulation in general, and specifically the reforms of the past few years, as a constraint and a burden. today i'd like to explore this viewpoint further and will also take the opportunity to explain why i'm convinced that we need the regulatory reforms anyway. i'd then like to talk about whether or where i see potential to revise the regulatory framework and how these changes could perhaps provide institutions with some degree of relief. 2 regulation as a burden but let's start with the idea of

, uniform rules ensure that the minimum requirements for risk identification and limitation are the same for all market participants, meaning that they can be assessed under fair conditions. on the other hand, rules establish trust. trust which banks and savings banks desperately need to do business. trust which many banks lost during the financial crisis. trust which has since had to be painstakingly rebuilt. 3 eliminate unnecessary burdens ladies and gentlemen, regulation and supervision are not expendable. this justifies a certain amount of burdens resulting from regulation. i am firmly convinced that regulation and supervision have a positive overall impact on the economy, consumers, and banks and savings banks themselves. that said, it is also clear that we should eliminate undesirably high burdens from regulation as far as possible, as i'm sure you will all agree. for that reason i would now like to talk about whether and where i can see such undesirably high burdens – and what we can do about them. however, i am opposed to a broad - brush criticism of regulation. this applies in particular to internationally harmonised rules for large institutions. as you are all aware, we have undertaken extensive reform measures in the past few years and are currently working on the final details in the basel committee. our work was and still is shaped by what we have learned from the financial crisis. one consequence of this is that the international rules have since become more extensive and complex. the increased complexity of the rulebook reflects the complexity of the global banking business, and is therefore completely justified. but the new rules do not solely concern the very big institutions operating on a global scale. the framework of the basel committee affects rules at both the european and national levels. these rules ultimately define the framework conditions of smaller institutions, thereby affecting you and your employees. in fact, this has resulted in burdens for smaller and medium - sized banks, some of which are undesirable and even harmful, because small institutions cannot utilise the economies of scale that large banks profit from when adhering to the rules. the regulatory framework has already partially taken this into account with gradations which vary according to an institution's size and business model. yet necessary measures such as the procurement of new it systems or the 2 / 4 bis central bankers'speeches recruitment of staff who ensure that the rules are complied with are still leading to high fixed costs, which represent a large burden to smaller institutions. when regulation makes size an advantage, this