is the supervised institutions that bear full responsibility for any risks arising from cooperation with an external service provider. examples of such risks are a potential default by the external service provider, or the possibility of reputational risk. the institutions must ensure that the risks remain manageable – for instance, by including relevant terms and conditions to this effect in cooperation agreements and by considering from the outset how they can keep their business up and running if the partnership is terminated unexpectedly. so this sums up the conditions de jure. but are they always appropriate to the economic conditions? depending on the individual case, the picture can be very different. where credit institutions work with large technology firms, such firms ’ negotiating power might be so large, for instance, that institutions have difficulty effectively imposing their conditions on their contracting partners for the service being provided. you might call this “ the tail wagging the dog ”. 4 / 6 bis central bankers'speeches we also have to make sure that it does not make sense to outsource certain tasks simply because you can afford to be more relaxed about dealing with the resulting risks outside the regulated enterprise. the more the boundaries between sectors are blurred and the more intensively banks work with non - licensed enterprises, the more relevant discussions like this will become. my personal view is that we should discuss to what extent we might take a closer look at supervising individual activities – activity - based supervision – in addition to entity - based supervision. i am thinking here, for instance, about services provided by insourcers of a certain size and importance, such as cloud service providers. however, this would have significant repercussions – not least for supervisors. so that ’ s why it ’ s crucial that the debate does not take place in a vacuum, but always with a view to what is necessary and essential in order to tackle the key risks effectively. we are still in the early stages of this debate. in any case, the entity - based supervisory approach should remain unaffected. we cannot start to define areas where an institution is relieved of its responsibility for risks that ultimately affect its own services. this would pose a problem not just from the point of view of effective supervision, but also in regulatory terms. i also see a european dimension here. europe is already pressing ahead with regulation for issues emerging as a result of digitalisation. i am thinking, for example, of the eba ’ s recently issued guidelines on outsourcing arrangements. the bundesbank and bafin helped to draft these

##basing the coinage – that is to say, of “ tipping the scales ”, possibly even at his employer ’ s behest. and to be absolutely honest, aren ’ t we central bankers, too, often widely suspected of “ tipping the scales ”? after all, in an era in which money is made of paper, and the metal value of coins is less than their face value, it has become much cheaper to manufacture currency. it was to nip any such suspicions in the bud that the european treaties committed the eurosystem to the objective of maintaining price stability and made it independent of political influence. the rationale for this was that preventing monetary policy from being subjugated to the fiscal whims of governments would keep the value of money stable. that is why central banks attach such great importance to sound government budgets and fiscal compliance – criteria which, at the end of the day, serve the overriding goal of shielding monetary policy. 2. cash – an anchor of confidence german sociologist georg simmel wrote more than a century ago that “... money... is perhaps the most concentrated and pointed form and manifestation of confidence in the socio - political organisation and order. ” money and confidence are inextricably linked. and confidence in a currency has its roots in cash. that is perhaps even more true for the euro than it is for other bis central bankers ’ speeches currencies since euro cash – the common means of payment we use throughout the euro area – is the most manifest symbol of european integration. it ’ s the calling card, if you will, of every single european institution, something that passes through everyone ’ s hands on a regular basis. that ’ s one reason why cash is so hugely important for us. and that ’ s why we at the bundesbank set high standards for the quality of the cash we introduce into the system. quality has its price, of course – in this instance, it ’ s our dedication to providing a sufficient quantity of cash that consistently meets high quality standards. just over two years ago – at the second cash symposium, in fact – professor otmar issing recounted how, shortly after he took office at the bundesbank in 1990, he was informed, only half - jokingly, by the then - bundesbank president karl otto pohl that the bundesbank was not only responsible for monetary policy but that it was “ primarily a business engaged in transporting and distributing banknotes ”. the staff