reflection of this desire for a simple solution. 2. parallels to the financial world ladies and gentlemen, i hope you are not wondering by now if you accidentally ended up in the wrong room, listening to a talk about contemporary history, political science or sociology. because of what i have just described is also very relevant for my field of expertise – the banking and financial sector. it is my impression that, like the world as a whole, the financial world is currently going through its very own period of change and uncertainty, that it is struggling just as much to cope with it, and that we are just as prone to the lure of easy answers. 1 / 5 bis central bankers'speeches in this context, you may already have come across the term “ the new normal of banking ". it suggests that the sector has reached some kind of new equilibrium and that we have understood what it characterises. first of all, i doubt that this is true. and second, to be honest, whenever i hear this phrase i don ’ t even know exactly what is meant by it. therefore, i want to dedicate the remainder of my remarks to an overview of what i believe to be the major developments in and challenges for the banking sector. i will also discuss possible answers to these challenges. coming from deutsche bundesbank, i will of course be doing this from a european perspective. but in our discussion later on, i am eager to hear your views on, and to learn from your experiences in the financial sector in brazil and latin america. 3. challenges for ( european ) banks let me start with a challenge i have already mentioned : the pending divorce of the uk and the eu. i have mentioned it because of its political impact. but as you know, it has strong implications for the financial sector as well and will continue to do so. many eyes are on the question of whether, and in what form, the uk will retain access to the single market. in the financial realm, the related question is whether financial firms in the uk will continue to benefit from what we call “ passporting ". currently, many international banks use london as a hub to conduct business within the european economic area. but depending on the deal that will be struck between the uk and the eu, passporting in its current form might end – and with it the possibility to enter the european market through the uk. another open question is whether the city of london will still be in a position to clear euro - denomi

in line with our definition of price stability. thursday ’ s decision keeps our monetary policy on a longer - term stability - oriented course. the decision and its underlying rationale demonstrate continuity and do not in any way indicate a paradigm change to short term demand management. by doing so, the decision contributes to creating an economic environment in which the considerable growth potential of the euro area can be exploited. those responsible for other policy areas are urged now even more to take the necessary steps to improve longer - term growth prospects for the euro area. a cut in the central bank ’ s rates cannot be a substitute for convincing structural reforms in the economies. that should always be kept in mind in discussions on the stabilisation potential of monetary policy. if monetary policy tries to meet other objectives, the risk of missing the main objective is great. specifically, the eurosystem is sometimes accused by critics of squandering opportunities because of the type of final goal definition selected. that relates, to begin with, to the alleged asymmetry of statistical price rises that are consistent with price stability in the view of the eurosystem. but the assumption of asymmetry is based primarily on a misinterpretation of the quantitative definition. thus, it is quite clear from the formulation chosen that, in the view of the monetary policy makers in the euro area, both a deflation in the sense of a sustained decline in the price level and a rate of monetary erosion of 2 % and more are deemed to be harmful. hence undue importance should not be attached to the fact that the ecb has refrained from formally defining a floor for the objective of price stability. that is due not least to uncertainties with regard to the measurement - error problem posed by the harmonised consumer price index. but the criticism sometimes also applies to the formulation of the stability objective in the shape of a target corridor, rather than a possible orientation towards a single - figure target. if the criticism were warranted in this respect, it would, incidentally, also apply to the swedish central bank, which unlike the practice of inflation targeting in, say, the uk - has likewise formulated its target variable in the shape of a corridor. the starting point of this corridor debate is therefore the fact that - at least in theory - a central bank that gears its policy to a single - figure target, rather than a target corridor for price movements, is likely to take monetary countermeasures earlier if changes occur in the price outlook