for banks, it will definitely help to increase the stability of the financial system. 4. conclusion and outlook ladies and gentlemen, the french writer francois fenelon once claimed that, “ the more you say, the less people remember ”. as this obviously isn ’ t my aim, i would like to conclude my remarks by taking a peek into the future. the past history of regulation has been one of constant ups and downs. periods of deregulation have usually been followed by a crisis, then followed by a period of reregulation, and again by a period of deregulation. it is precisely in phases of re - regulation that banks tend to complain about the time and money it costs – and the present period is no exception. but are we really overregulating? if we look at the benefits to society of a stable banking system and the social costs of a banking crisis, i believe the costs of regulation are justifiable. however, for the future i would like regulation to evolve somewhat more steadily and adapt more quickly to new challenges : the low - interest - rate phase, high - frequency trading, charges of manipulating the libor or the setting of forex rates and gold prices, to name just a few examples. we should not wait until the aftermath of the next crisis to come up with ways of responding to these challenges. i do not believe, however, that regulators and supervisors are all - knowing and all - powerful. the bankers are just as responsible as the supervisors and regulators. i am well aware that the number of “ bad apples ” among bankers is very small. however, their behaviour causes everybody to suffer : the public, when a crisis breaks out, and the bankers, when the public tar them all with the same brush. yet we should be aware that the value of the financial system is measurable against one key criterion : its reliability as a service provider to the real economy. financial transactions are not an end in themselves. if we can instil this idea in people ’ s minds, we ’ ll be able to take the final key step in our quest for greater stability. thank you very much. bis central bankers ’ speeches

##s. in this respect basle ii contributes to a more efficient pricing of risks. bank loans for high risk projects are becoming more expensive, while the opposite is true for low risk loans. but does this mean that it will become more difficult for risky projects to get financed by bank loans? not necessarily! one could rather expect the opposite effect. an increased level of monitoring and pricing of risks could also be beneficial for the financing of innovations. this is because both reduce the information asymmetry and lead to a greater allocative efficiency. hence risky innovative projects with a reasonable likeliness of success might pay higher loan premia but might also have better chances to find funding. in contrast, a less closer monitoring and pricing to risks could rather lead to credit constraints which are likely to be less efficient. now, i would like to draw your attention to the german venture capital market. the main virtue of venture capitalists is the combination of funding for high - risk projects with management support. as the us national venture capital association puts it, they are “ entrepreneurs first and financiers second, because they seek to add value through their experience in investing ”. venture capital only played a minor role in germany for a long time. promoting start - up firms only started to develop about ten years ago. over the last ten years, the amount of capital invested in german venture firms has increased from 0. 15 % to 0. 84 % of gdp, reaching about €18 billion in december 2003. despite this remarkable growth, venture capital is far less significant in germany than in the us where it has become a mainstream asset class, amounting to more than 2 % of gdp. before the peak of the stock market bubble was reached, there was a high funding surplus in the german venture capital market. this suggests that the bottleneck for further market growth was due to the structural impediments for an innovation - based production. in the last two years, gross investment in venture projects amounted to only €2. 4 billion or 0. 12 % of gdp. moreover, after the bubble burst, there were considerable shifts from financing high - risk to low - risk later stages. these shifts reflect a reduced risk appetite among investment companies. the gradual disappearance of the ipo option has discouraged those who had assumed an exit via the stock exchange. after stocks had crashed on the “ neuer markt ” divestments became less profitable. today, there are some signs of optimism and new momentum on the german