of 9. 5 % and the 125 other banks had a ratio of 9. 1 % in mid - 2013. the target for 2019 of 7 % common equity tier 1 capital is therefore already more than met, on average. of course, that does not mean that all banks have already achieved the target of 7 % plus potential surcharges for global systemically important banks. however, the cumulative shortfall of the large international banks halved in the first half of 2013. the eight large german banks with an international focus that the bundesbank examined had an average ratio of 8. 3 % as at the 30 june cut - off date, while the 40 smaller banks even had a ratio of 12. 8 %. large banks ’ capital requirements also almost halved, from 9 billion euro to 5 billion euro. the 7 % target ratio includes a new capital conservation buffer of 2. 5 percentage points. this buffer will allow losses to be absorbed effectively. it thus goes some way towards resolving the problem which the british economist charles goodhart has described as the “ regulatory paradox ”. imagine you arrive at an unknown railway station late at night and there is exactly one taxi at the station ’ s taxi rank, which you wish to take to your hotel. the taxi driver tells you that he is sorry but he cannot take you because the city authorities demand that there must always be at least one taxi waiting in front of the station. metaphorically speaking, the traditional minimum requirements guarantee that there is exactly one taxi at the taxi rank. however, this capital cannot be used to absorb losses, as hard - hitting supervisory sanctions would be imposed if capital falls below requirements. the new rules ensure that there are at least two taxis waiting. now, taxi drivers will counter that the more taxis there are waiting for customers, the longer they stand idle, and that is expensive. bank representatives use a very similar argument when they say that capital is expensive and conclude that a bank ’ s assets should be funded with as little capital as possible. however, the argument should really be that debt capital is cheaper as it currently enjoys tax privileges, which makes equity financing comparatively unattractive. and there is, i may add, a considerable difference between whether the worst case is having to wait for a taxi or facing stability risks in the financial system. i therefore believe that it is right to create greater capital reserves than regulators are currently demanding in order to make the financial system more robust. a problem that german and other banks have been

burkhard balz : shaping europe together speech by mr burkhard balz, member of the executive board of the deutsche bundesbank, to mark the inauguration of the bundesbank ’ s new representative, madrid, 3 nov 2021. * * * 1 introduction your excellency ambassador dold, ladies and gentlemen, “ ¡ de madrid al cielo! ” – “ from madrid to heaven! ” – is an old spanish saying. and on that note, it gives me great pleasure to be back in madrid and speaking to you here today. my thanks also go to ambassador wolfgang dold for providing the setting for today ’ s event. the federal republic of germany ’ s first chancellor, konrad adenauer, paid a visit to madrid in 1967 at the ripe old age of 91. in a fiery speech, he spoke about his vision of a united europe that shared a common heritage, traditions and culture. a europe made up of just the six member states of the european economic community at that time could not be the end of the story, adenauer said. spain, he stressed, also had to become a major component of what was to become a united europe – because of spain ’ s geographical location, history, tradition and the irreplaceable role it played in european culture. this was to be adenauer ’ s last major public appearance. he would never see part of his vision – spain ’ s accession to the european community in 1986 – become reality. however, much of what adenauer spoke about back then has now come to pass. the process of european integration advanced steadily, and spain is now firmly anchored within the european union. spain was also among the first group of countries to introduce the euro, which is one of the most visible symbols of european integration in our day - to - day lives. this single european currency heralded major changes for the national central banks of member states. they stopped making decisions on their countries ’ currencies when the european central bank ( ecb ) was established in 1998. instead, it is the ecb governing council, a body made up of the ecb executive board plus the governors of the national central banks of the euro area countries, which sets monetary policy for the euro area. a single monetary policy needs to take into account the different economic developments in the member states. this can often be a challenging endeavour, as we clearly saw in the wake of the financial crisis and during the recent covid - 19 pande