of the real economy. good advice is therefore essential here. things become dangerous when banks get wrapped up in a world of their own. when speculation becomes an end in itself. properly functioning management structures need to be able to prevent this. this relates not least to remuneration structures. it also has to do with questions of organisation and often with the quality of a bank ’ s risk management. and it has to do with the rules banks set themselves and live by in their dealings with customers : for instance, finding out what the customer actually needs first, instead of starting off by seeking to maximise fees. or take, for example, “ payment by customer satisfaction ”. obviously, customer satisfaction is difficult to measure and to attribute to individual advisors. or there is the issue of “ product information for investment products ”. the importance of clearly explaining the opportunities and risks involved in financial products should be selfevident. and yet, quite a lot of people feel they are on shaky ground with these products, partly because the products are complex, possibly too complex. there is still work the banks can do in this regard. so, there is a lot that individual banks can improve if they are to regain the trust of customers and the public, not least by setting an example and leading from the front. the gordian knot but what can the state do? one thing the state certainly can and must do is create a suitable overall organisational framework and supervise institutions effectively. i will have more to say about this later. but, above all, there is an ethical principle which needs to be heeded more closely, particularly in these times of financial and sovereign debt crisis. the principle is that of subsidiarity, on which walter eucken, one of the founding fathers of the social market economy, based his notions of how the economy and society should work. the aim of subsidiarity is self - determination and individual responsibility. according to this principle, problems should be solved through individual responsibility as far as possible, which is to say by the individual or individuals, or by the smallest group or at the lowest level of an organisation. only if this is not possible should subsidiary assistance be provided by groups or public collective organisations of progressively increasing size or at progressively higher organisational levels. this principle places ethical limits on the scope for state action in the current crisis. and it also follows that those who receive assistance must learn to live with monitoring and control. there are economic limits in any case

also prepared to take responsibility – not just for themselves, but for others, too. in this sense, a change in consciousness is required. trust, long - term thinking and sustainability : these are all challenges which face our society as a whole. short - termism, on the other hand, is one of the principal causes of the current financial crisis and crisis in trust. in terms of short - termism on the financial markets, there are two opposing theories. one theory says that enterprises and banks – the large ones at least – belong to their shareholders, and should therefore be managed in their interests. shareholders ’ income rises and falls with the bank ’ s performance. the shareholders ’ interests therefore lie chiefly in the enterprise ’ s long - term success. the opposite theory says that because shareholders are the most mobile, they are the ones least concerned with the long - term future of the bank or enterprise – unless they hold so many shares that selling them might inflict damage on the enterprise. therefore, they favour short - term profit growth and pay little regard to long - term prospects. there is certainly evidence pointing to a long - term approach being in the best interests of proprietors. many owner - managed banks held up well in the financial crisis. in concentrating on investment advice, most of these institutions have a business model which continued to work in the financial crisis. the savings bank sector also weathered the crisis well. and the bis central bankers ’ speeches same goes for the cooperative banks, in which the customers are also owners. these institutions did not lose people ’ s trust. let me be clear : this does not mean that banks operating as public limited companies are obliged to take a short - term approach. but they need to put in place functioning management and incentive structures. and they most certainly have to restore a greater sense of social responsibility to their own houses. the financial sector ’ s role in serving the real economy needs to be clearly discernible in their business models. investment banks can do this too. equipped with the right business model, they can be genuine “ servants ” of the real economy. there are many ways of doing this. for instance, providing good advice in the business of mergers and acquisitions. such services are of value for customers in the real economy. and a suitable price can be charged for such services. or if a bank undertakes currency - hedging on the foreign exchange market for an exporter, this can be of existential importance to an enterprise which is part