jens weidmann : digitalisation, financial regulation and low interest rates dinner speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the 6th frankfurt finance summit, frankfurt am main, 11 may 2016. * 1. * * introduction dr raettig ladies and gentlemen good evening, and a very warm welcome to you all at the conference dinner of this year ’ s frankfurt finance summit here at the deutsche bundesbank. i am speaking this evening not as a host but as a guest speaker, but i think that has little bearing on what i have to say. so thank you very much for your invitation and for giving me the opportunity to share my thoughts. once a year, frankfurt main finance e. v. brings together decision - makers from commercial banks, insurance companies, stock exchanges, regulatory authorities and central banks as well as academic experts to discuss the latest issues in the financial business. as you all know, frankfurt is germany ’ s leading financial centre and the euro area ’ s foremost financial hub. however, some of you might not be aware that we are gathered this evening at this city ’ s nucleus as a financial centre after the second world war. the old part of this building complex, which today houses the bank ’ s regional office in hesse, was once the domicile of the bank deutscher lander. and the establishment in 1948 of the newly founded german central bank in frankfurt is widely seen as marking the start of frankfurt ’ s emergence as germany ’ s leading financial centre. the establishment of germany ’ s post - war central bank ignited a fierce debate among the english - speaking allies. while the americans preferred a decentralised central banking system rather like the federal reserve system, the british authorities were more in favour of a centralised set - up with a central bank in hamburg. with hindsight, we now know that the british gave in on this particular point. but what, in an alternate history, would have happened if the british had prevailed on this issue? would you perhaps be attending the “ hamburg finance summit ” tomorrow – indeed, what would frankfurt look like today if all the skyscrapers had not been built? that ’ s something we ’ ll never know. ladies and gentlemen, fear not. in the following, i will neither delve into historical anecdotes, nor will i present you with any further hypothetical questions. rather, i would like to talk about

. for example, “ dim sum bonds ” are now being issued across the globe. named after the tasty dumplings, these are renminbi - denominated bonds issued outside mainland china. such bonds issued in germany have been dubbed “ goethe bonds ” by market participants. several goethe bonds have been issued in the past two years and more such bonds are to be expected to be launched as the renminbi becomes more liquid. germany is europe ’ s largest economy and has the closest trade links with china. due to these close real economic ties between our enterprises, it is obvious that the settlement of payment flows should be as efficient and thus as direct as possible. to this end, a clearing bank was set up in frankfurt last year that clears, for instance, payments made by german companies to chinese suppliers. large german enterprises have had a presence in china for quite some time now. however, the ongoing opening of the chinese market and the simplified clearing of transactions also provides small and medium - sized enterprises a wide range of growth opportunities. it is likely that these enterprises will step up their involvement in china even further in the future. indeed, a survey by a commercial bank 2 has revealed that 17 % of smes engaged in business with china already settle their accounts in renminbi. another 11 % are said to be planning to switch their invoices to the chinese currency. these enterprises are hoping to gain advantages in price negotiations as well as better market access. in addition, it means that enterprises can better hedge exchange rate risks. with a clearing bank in their own country, enterprises can, for example, settle accounts in their own time zone, in german and under german law while commerzbank. bis central bankers ’ speeches still having a direct link to the chinese payments system. in this way, payments can be settled faster and potentially also at lower cost. a direct connection is now also possible through the new china international payments system ( cips ). participating banks have been able to settle their payments directly with china via this system since 8 october 2015. the stability and efficiency of cips will have a decisive impact on the future of the various pre - existing trading platforms. the same is true of the clearing banks. legal risks for foreign enterprises are often cited as a problem for those wishing to expand their business in china. the chinese government, too, is aware of this problem. in february 2015, prime minister li stressed once again that the climate for foreign investors in china needed further