, by contrast, would have an advantage, not least because at1 coupons are tax - deductible in most member states. to sum up : banks would become less resilient and the playing field less even. but let me come back to basel. the reforms we agreed on in basel do make sense, and they strengthen the resilience of banks. a key feature of the reforms is their global nature. they are designed to ensure not only safer and sounder banks but also a level playing field. so if reforms are not implemented as agreed, the playing field will become uneven, opening the door to regulatory arbitrage. but regulation is not the only game in town, of course. supervision counts too. and although supervisors need rules to guide their work, they see that not everything can be or should be captured by rules. global reforms such as those devised in basel and their transposition into european law cannot be perfectly tailored to each and every business model that banks pursue. at best, rules can cover the average case. this is particularly true in a sector that is changing as quickly as banking. so it is up to the supervisor to adapt the capital requirements to a bank ’ s specific risk profile in order to cater for deviations from the average case. to this end, the rules should be principlebased and leave sufficient discretion to the supervisors. in the european context, this need is even greater, as nowadays, we often have to deal with 19 slightly different national rules applying to the same case. 2 / 3 bis central bankers'speeches common principle - based regulation, applied to all 19 countries, would allow supervisors to cater for bank - specific risks in their national environment, thus ensuring a level playing field. so, let me conclude. the overarching question is : have the reforms so far helped to make the banking sector a safer place? my answer is : yes they have, but they still need to be finalised. the key point is to implement the reforms, to turn them into actual law. so, we cannot stand still ; we have to move on. and under no circumstances should we move backwards. thank you for your attention. 3 / 3 bis central bankers'speeches

sabine lautenschlager : the banking sector - where did we end up after all the reforms? opening statement by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, to panel 1 " after all the reforms : where did we end up? " at the 6th frankfurt conference on financial market policy : " european financial markets – too much variety? ", frankfurt am main, 14 december 2018. * * * it ’ s often said that in every crisis there is an opportunity. and in the case of the financial crisis, i think that regulators have seized that opportunity. the crisis prompted an overhaul of banking regulation. and it did so not just at the national or european level. through the g20 and the basel committee on banking supervision, the reforms became a common project at the global level. so what was the general idea behind these reforms? the primary aim was to address specific issues that had been laid bare by the crisis. this was the first step. but regulators knew, of course, that the latest crisis is never a blueprint for the next one. the next crisis might come in a completely different form. so the second step was to enhance the general resilience of banks, to make them strong enough to withstand any type of storm. this idea underpins the three main building blocks of the reforms : capital, liquidity and governance. and much has been done on all three fronts. banks not only have to hold more capital than they did before the crisis ; their capital also needs to be of higher quality. banks can therefore suffer more losses before they actually fail. at the same time, banks have to fulfil much stricter liquidity standards than before, providing them with a cushion in case trust evaporates and funding dries up. this allows banks to survive such a situation for longer than in the past. reforms to improve governance and risk management have also come about, but these have received less attention. for too long, governance and risk management have taken a backseat in public or academic debates. but they are just as important as capital and liquidity – if not more important. after all, good governance and sound risk management help to prevent a bank from getting into trouble in the first place. capital and liquidity are merely backstops for bad management – or bad luck. new rules help banks to set up appropriate processes and integrate them into their organisational