taxpayer is being asked to cough up. you can ’ t have liked that. we have taken some enormous steps forward with the european resolution authority and our banking supervision. but we haven ’ t yet reached our goal. for instance, european banking supervision is still lacking some tried and tested tools to be able to act more quickly and effectively. take the moratorium tool, for example : if a bank gets into trouble, all cash outflows can initially be stopped. that tool exists in germany but not in spain. but banking supervision is in any case in a state of flux because there are constant innovations. just think of the fintechs. yes, there are always new developments in the banking business – but there ’ s no need to react to every innovation with a new tool. after all, you don ’ t buy a new screwdriver every time you buy a new shelf, regardless of whether you bought it from a swedish furniture store or from an exclusive manufacturer. are credit institutions earning enough money? banks are complaining about low interest rates and the resulting lower interest margin. the low interest rate environment is certainly a challenge in the long run. but the earnings performance of quite a few banks was already critical when interest rates were high. that ’ s because, among other things, we have a very large number of banks in germany, around 1, 600. there are, in fact, too many of them. they maintain a large and very costly network of branches. and because competition is fierce, the banks ’ margins are low. loans are cheap, some of them too cheap, and some banking services are being provided free of charge. that eats away at earnings. so we need more mergers. consolidation is necessary. some banks have already been moving in that direction, such as in the cooperative sector. there are now fewer than 1, 000 cooperative banks ; 15 years ago there 2 / 3 bis central bankers'speeches were several hundred more. but banks must continue to squeeze costs and open up new sources of revenue. so prices are set to rise for customers? not all banking services can remain as favourable as they are now. we see aggressive rates in some areas. while the supervisor doesn ’ t determine prices, generally speaking good services should command fair prices. such services can ’ t be free forever. do you understand why german savers are complaining about low interest rates? yes, i understand why, but every saver is an employee or a business person, and sometimes also a borrower

to each of these parameters. in the case of china, for example, while the appropriate size of the renmimbi ’ s appreciation will depend on considerations of macroeconomic balance in the context of the ongoing demand rebalancing, the degree of exchange rate flexibility could be used as part of the authorities ’ strategy for addressing the need to manage the effects of capital inflows while preserving domestic macroeconomic and financial stability. for countries facing large capital inflows, greater exchange rate flexibility may represent the most effective line of defence, reducing the need to accumulate official reserves. the main challenge posed by capital inflows for fixed - exchange - rate countries is to prevent them from feeding excessive growth in domestic credit, asset market booms and inflationary pressures, given the difficulty of fully sterilizing the domestic effects of reserve accumulation in a context of limited development of the internal financial market. while a crawling peg does not provide greater monetary autonomy than a fixed exchange rate ( it may even require maintaining lower interest rates than those in the anchor currency ), exchange rate flexibility – even within the limits of a fluctuation band – introduces a perception of two - way exchange risk, which should help discourage one - sided speculative bets on a renminbi appreciation. this buffering effect will be greater if the fluctuation band is sufficiently wide. such a regime would allow greater leeway for an autonomous monetary policy : a rise in domestic interest rates would normally be associated with a more appreciated exchange rate within the fluctuation band, and thus with greater scope for future depreciation ; it would not, therefore, trigger capital inflows if the band is credible. a possible second line of defence in the face of excessive capital inflows, particularly when these are a structural phenomenon, could be greater liberalization of capital outflows. this should be part of a broader process of fostering domestic financial development, both in order to ensure an efficient allocation of the country ’ s huge pool of savings and to support china ’ s increasingly globalized and sophisticated companies. related to this broad project is also the objective of enhancing the role of the renminbi as an international currency. in this context, the introduction of some degree of exchange rate flexibility ( possibly increasing over time ) can be seen also as a way of gradually allowing domestic investors and firms to familiarize with the management of exchange risk. here the interaction with financial market development is important : as domestic firms and banks become exposed to currency risk