sabine lautenschlager and andreas dombret : deutsche bundesbank ’ s 2011 financial stability review presentation by ms sabine lautenschlager, vice - president of the deutsche bundesbank, and dr andreas dombret, member of the executive board of the deutsche bundesbank, of the deutsche bundesbank ’ s 2011 financial stability review, frankfurt am main, 10 november 2011. * * * part i ( dr andreas dombret ) i am pleased to present, together with ms lautenschlager, this year ’ s edition of the bundesbank ’ s financial stability review. the environment for our report could hardly have presented a greater challenge. near the end, the flow of events had swollen to a cascade. at the european and international level, policymakers took decisions of major import in brussels and cannes. at the same time, the news from athens, in particular, was keeping europe on edge. on the one hand, this environment made things difficult, for we want our report to be absolutely on top of current events. on the other hand, it is precisely in such times that we need to stop for a second, take stock and ask : what is actually the current state of financial stability? and what should be the key criteria informing a smart financial stability policy and a smart regulatory regime? after all, our financial stability review seeks not just to analyse current events but also to find answers to longer - term questions as well. the current situation what is our assessment of financial stability in 2011? our main diagnosis is that the risks to the german financial system have increased perceptibly this year. high sovereign debt is certainty the greatest risk factor, and is likely to remain so for some time to come. among the positives : the german financial system has responded to the increased risk by improving its resilience. our review recognises and praises the fact that german banks and insurers have made good use of the tailwind created by the rapid recovery of the german economy which began in spring 2009. however, new strains are looming on the horizon. the improved resilience will probably be increasingly put to the test. a look at the factors affecting financial stability this year shows that the situation has changed. the positives have to do, in particular, with progress in germany ’ s financial system. capitalisation has improved, while the earnings situation has remained stable. funding vulnerabilities have been further reduced. in addition, europe

application to virtual currencies / crypto - assets and promote a more consistent regulatory approach, taking into account the results of fatf ’ s stocktake exercise of the different national regulatory approaches. we must therefore follow progress made on this matter and adapt our legislation accordingly. conclusion fintech is definitely here to stay. regulators must therefore brace themselves to accept new technologies as forming an integral part of the financial landscape. in the process, the bank of mauritius is ensuring that it has specialized and trained resources to assist it in fulfilling its mandate and better understand innovative and disruptive technologies. i must nonetheless emphasise that fintech must be encouraged specially where, rather than disrupting the whole system, it adds value and facilitates certain processes or activities such as transaction monitoring, client on - boarding process, regulatory reporting. it can also enhance supervisory capabilities. the use of innovative technology in financial supervision can indeed assist in this endeavour. supervisory technology ( suptech ) can help to digitise reporting and regulatory processes, resulting in more efficient and proactive monitoring of risk and compliance at financial institutions. the bank of mauritius and the financial services commission are collaborating in ascertaining that any potential regulatory gaps are addressed and regulatory arbitrage eliminated. i am confident that the financial services sector has a bright future ahead and together with fintech firms, regulators, services providers and customers can embark on this transformational journey and design a new regulatory landscape and financial ecosystem for mauritius. thank you for your kind attention. 4 / 4 bis central bankers'speeches