interest rates is discussed, attention quickly turns to central banks. amongst other reasons, this is because of the special role they have been playing in responding to the financial crisis. central banks all over the world took extraordinary measures, pushing policy rates to zero, providing excess liquidity, and purchasing assets on a large scale. in doing so, they contributed to a low interest rate environment that persists in the euro area to this day. ten years on from the peak of the financial crisis, we may have emerged from serious crisis threat, but the eurosystem ’ s monetary policy stance remains exceptionally expansionary. the anticipated end of net asset purchases marks only the beginning of the exit from the ultra - loose monetary policy. it is the first step on a path of normalisation which will last several years. what does this mean for insurers and pension funds which depend on capital markets rates? needless to say, interest rates will pick up as monetary policy gradually returns to normal. however, monetary policy does not dictate the levels of capital market rates at the end of this process. real long - term interest rates are crucially determined by saving and investment decisions made by households and enterprises. and even in an imaginary world without a financial sector, a rate of interest would emerge. indeed, beyond the recent period of low interest rates, we have witnessed a considerable decline in real yields on long - term government bonds in major advanced economies since the start of the 1980s. owing to its persistence and outreach, this decline is often attributed to secular or global forces. in particular, a recent study points to lower trend growth as a major factor, which is possibly linked to demographic changes. 7 4 / 7 bis central bankers'speeches given the decline in the actual real rate of interest, numerous studies suggest that the so - called natural rate has also decreased in recent decades – that is, the real interest rate at which the goods market is in equilibrium and prices are stable. this rate may have important implications for monetary policy. in particular, the natural rate is often seen as an important benchmark for the monetary policy stance. if the key interest rate less the expected inflation rate is below this interest rate, monetary policy is expansionary, as it provides incentives for consumers to purchase more and for enterprises to step up investment and output. therefore, the natural rate may be an important anchor for monetary policy to achieve its objective of price stability – at least from a more theoretical perspective. simply put, if monetary policy tracks

. small and medium - sized institutions prove largely resilient to a simultaneous rise in the three types of risk. 2 / 4 bis central bankers'speeches thus the stress test scenario presents a mixed picture overall. on the whole, german banks and savings banks are robust and in good shape. but this should not blind us to the major challenges and the associated need for adjustments that banks face. elevated interest rate risk and the low level of risk provisioning increase vulnerability to shocks. i would therefore call on banks to focus their risk management operations primarily on the issues of maturity transformation and interest rate risk. 5. brexit will represent a challenge let me round out my remarks by discussing a challenge faced by all of us and which is having a particular impact on institutions. in all likelihood, the united kingdom will be leaving the european union on 29 march 2019. in that respect, no press conference on financial stability can avoid the topic of brexit. i will therefore address this topic in the remainder of my remarks. the negotiations ’ progress has tended to be on the sluggish side, creating considerable uncertainty for everyone : citizens, companies and not least the financial sector. in the 16 months that remain, the brexit - related restructuring has to be completed in order to ensure the uninterrupted continuation of customer relationships between economic areas. in this connection, i urgently advise all financial market participants to begin reorganising their operations as soon as possible, and to implement this process rigorously. this means, in particular, that all those banks seeking to continue to do business in germany or in other eu countries once the uk leaves the eu should, if they have not yet done so, file applications for licences as fast as possible. solutions also need to be found with regard to how existing contractual relationships will be continued seamlessly after brexit. for those institutions which change their contracts proactively hoping for their customers ’ tacit approval, legal risks could ensue, at least concerning retail customers. time will ultimately be the decisive factor. for the uk to achieve the smoothest possible exit from the eu, meticulous preparation by the banking industry is not the only thing that will be necessary. the preparations – or rather, the lack thereof – in the real sector give me cause for concern. companies should put their own access to financial services on a solid footing, and vulnerabilities that the uk leaving the eu will create for their own business models need to