the economy. there are two things i can say in response. first, i do not see that regulation keeps banks from their traditional business of financing the economy. loans to private households and smaller companies are treated very favourably when it comes to capital requirements. think of the support factor in article 501 of the capital requirements regulation. this factor was introduced to facilitate the financing of small and medium - sized enterprises. i also do not see that regulation keeps banks from developing new business models – those, for instance, that follow from digitalisation. second, critics neglect the benefits of strong rules. strong rules prevent crises, and crises hurt the economy. 1 / 2 bis central bankers'speeches at the end of the day, it is only well - managed and well - capitalised banks that are able to finance the economy – even when the going gets tough. they can finance the economy throughout the entire business cycle. poorly capitalised and poorly managed banks, on the other hand, cannot support the economy during downturns – they get into difficulty themselves. strong rules therefore help the economy in a sustainable way. and even if we only consider the banks, we still see benefits. stronger rules increase trust. and as a result of the crisis, a great deal of trust was lost. and that ’ s a problem for banks because trust is a crucial asset for them. trust has a positive impact on funding costs for banks, and it determines how attractive a bank is for business partners who think long - term. strong rules thus help the banks, too. altogether, i am convinced that the benefits of regulation are greater than the costs. but rules can only take us so far. ultimately, it is people who make good or bad decisions. and this is where banks ’ risk managers come into play. they are the first line of defence against excessive risks. thank you for your attention. 2 / 2 bis central bankers'speeches

has been a general principle in denmark throughout the financial crisis that the banking sector itself should fund the process of “ tidying up ” the sector. in fact, so far the danish government has made a profit of around kr. 10 billion, or 0. 6 per cent of gdp, from the bank rescue packages implemented. the final result cannot be calculated yet. * * * tomorrow ’ s theme is “ central banking in an age of collateral - based finance ”. the financial crisis has enhanced focus on bank liquidity, and the securities that are seen as liquid. this is reflected in the basel iii rules to be implemented in the coming years. collateral is required when borrowing from central banks. it has been necessary to expand the collateral basis during the financial crisis. uncollateralised lending in the money market, which was common prior to the crisis, has all but vanished in favour of collateralised lending. the banks also need to pledge collateral when borrowing from central banks. all this has increased the need for collateral in banks. in many countries, collateral is restricted to government bonds. denmark is unique in the sense that we have a very large and well - developed mortgage - credit sector and hence a large volume of outstanding mortgage bonds. these bonds may be pledged as collateral for loans from danmarks nationalbank in the same way as government bonds. but it is still uncertain to which extent they may be included in the liquidity reserves of the banks in future. throughout the financial crisis, danish mortgage bonds remained liquid and new issuance took place. in general, lack of collateral is not a problem in denmark, but naturally it may be so for a few banks, especially those under pressure. danmarks nationalbank has on several occasions expanded the collateral basis for borrowing by banks. some of the measures were temporary and applied only at the peak of the crisis. for example, danmarks nationalbank has expanded the collateral basis to include banks ’ lending of good quality. this has also improved the liquidity of the banks ’ balance sheets. * * * the theme of this conference, “ central banking at a crossroads – europe and beyond ”, is highly topical and those present here today include many outstanding scholars within this field. i think we have a couple of very interesting days ahead of us. with these words, i declare the conference open. thank you for your attention. bis central bankers ’ speeches