have, to date, operated their european business from london and now wish to establish offices or expand their presence in germany. currently, the european union and the united kingdom are negotiating their future relationships and a possible transition period. however, it is impossible at the moment to predict what the future relationships will look like and whether there will, indeed, be a transition period. financial institutions should therefore not be lulled into a false sense of security. banks that wish to continue to do business in the other economic area – that is, in an eu 27 country or in the united kingdom, respectively – should at least establish the necessary base units there. and for 1 / 8 bis central bankers'speeches the european union, base unit means more than just a “ letterbox ” company. it means that there must be enough qualified staff at the respective location in the eu to support critical operations at all times. last year also saw us complete our gold transfers. you may remember that the bundesbank ’ s executive board decided back in 2012 to repatriate by 2020 some of the gold reserves that are stored abroad. these transfers have now been concluded successfully and well ahead of schedule. german gold is now stored in only three locations : half of the gold reserves are held at the bundesbank in frankfurt. the other half is stored with our two partner central banks, the federal reserve bank in new york and the bank of england in london. the fact that the gold holdings were spread across the individual storage sites was mainly due to historical reasons. with the transfer of the gold to the remaining storage locations, the bundesbank has adjusted to the changed environment in terms of the objectives of safety, liquidity and cost efficiency. ladies and gentlemen although this list is not exhaustive, you can see that we faced challenges across the breadth of our tasks in 2017 – and these tasks comprise more than just monetary policy. but when it comes to the presentation of our annual accounts, the central bank balance sheet and thus the profit and loss account are, of course, very much influenced by monetary policy. 3 monetary policy and that brings me to economic developments and monetary policy. economic performance was very satisfactory last year – in germany, the euro area and beyond – and the recovery accelerated further in the second half of the year especially. the upswing now rests on a broad base everywhere. year - on - year growth in 120 countries accelerated last year. that includes the vast majority of euro area countries. economic activity expanded at a

notion that the eurosystem could also make a contribution, for instance, by providing bridge loans. i don ’ t think that ’ s a good idea. true, a central bank can provide emergency liquidity – but only if a bank is suffering from temporary liquidity shortages. however, it may not, and should not, contribute aid towards resolution or restructuring, as this can easily cross the line into fiscal policy. as a last resort, however, the fund could request public financial assistance for example, from the esm, as there could be threats which, in extraordinary cases, could require recourse to public funding. 5. direct recapitalisation through the esm public funds is a buzzword and a hot - button issue, one that is inseparably linked to the question : who is the public that is supposed to be doing the funding? should nation - states be called to pay up whenever a crisis occurs, or should there be a joint european fund? i see no compelling reasons why the costs of bank restructuring should be shifted entirely to the european level. you see : the weal and woe of a bank depends not only on the competence of its management but also on external factors : the quality of supervision ; the financial and economic strength of its borrowers, which in turn hinges on a nation ’ s economic policy ; and also the fiscal policy of the country where a bank is based. ample proof of this assertion is bis central bankers ’ speeches provided by the fact that a bank ’ s funding costs are dependent on the sovereign credit rating of its home country. although we will be centralising supervision in europe next year, other factors such as economic and fiscal policy will remain largely the responsibility of individual nations. and, as long as that is the case, the arguments for shifting losses completely to the european level do not appear to be compelling. the balance sheet assessment provided for by article 27 of the ssm regulation also acquires major significance in this context : this article requires the ecb to assess the portfolio quality of the banks it will be supervising in future. what the regulation does not say, however, is what happens if hidden losses are disclosed. i have two things to say about this. i consider the balance sheet assessment to be very important. for it to be successful, we should base our assessments of banks ’ balance sheets not only on supervisors ’ judgements. we should also enlist outside specialists – external auditors – for a quantitative assessment. not only