: regulators and supervisors can behave in a competitively neutral manner by strictly focusing their interventions on risks that stem from an institution and pose a threat to the financial system. this is because the same degree of competition does not exist between all banks. for instance, a regional bank operating in the area surrounding berlin is hardly competing with its us equivalent. in my view, the argument regarding competition, as relevant as it may be in the case of big banks competing at the international level, should therefore not be overstated. time and again, we are finding that the approach taken to implementing the principle of proportionality varies from country to country. and that is as it should be. my advice would be to use these differing approaches as inspiration and as a catalyst for exchanging views across national borders. for instance, the united states introduced the basel ii requirements almost exclusively for large institutions. turning to the basel iii regulations, the us authorities have given smaller “ community banks ” more time to implement the rules and have also factored in some relief for these institutions regarding individual rules. in other words, there has not been a separate regulatory regime there to date. a proposal that could change this is currently on the negotiating table as part of what has been dubbed the choice act. what this entails, in a nutshell, is that an institution need not meet a large proportion of the detailed requirements with which it must normally comply if it has a sufficiently sound leverage ratio. this is generally in keeping with the kind of proportionality i support. let me repeat : operational relief can only be provided if it does not come at the expense of resilience. that said, the internationally agreed regulatory regime remains crucial for our financial system. criticise basel iii if you like for its complexity, but you won ’ t find a simple alternative that maintains healthy international competition while simultaneously combatting the shifting of risks into inadequately regulated areas. in a global financial framework, national regulators cannot simply dodge these responsibilities. but it may well be possible to reconcile a separate set of rules that provides relief for regional, low - risk institutions with such a global financial framework. with that in mind, the debate on such a “ small banking box ” should be continued in an open - minded and constructive manner. 4. conclusion ladies and gentlemen, i have spent the last quarter of an hour attempting to illustrate the conditions under which i believe greater proportionality in banking regulation would be both possible and sensible. let me now conclude by summarising the key points

befall any institution. if the banking industry is to function as part of our market economy, banks and savings banks need to behave like other economic agents and take responsibility for their decisions and the consequences of those decisions. viewed from this perspective, supervisory authorities ’ quantitative minimum requirements – above all, capital requirements – ensure that the banking industry is subject to a minimum degree of entrepreneurial accountability. 3. global competition, global proportionality in regulation ladies and gentlemen, how can a globally coordinated regulatory regime be reconciled with proportionality? do rules agreed at the global level mean that small, regionally focused banks have to be treated in the same manner as large multinational institutions? does a global regulatory regime leave no room for proportionality? my answer to this is no, there is no fundamental conflict. relief measures for smaller banks, and even separate sets of rules, are not at odds with the aim of a global regulatory regime. the basel agreements never set out to establish a single regulatory framework that applies to all banks, without exception, in every corner of the world. in fact, their objective is to make large and internationally active banks more stable by implementing a uniform set of rules and to make sure that there is a level playing field worldwide. it was only after basel ii had been implemented in europe for banks and savings banks across the board, irrespective of their size and business activity, that subsequent international negotiations and reforms began to turn their attention to the smaller institutions. it is therefore up to us in europe to reconcile global competition with fitting rules for institutions operating regionally. in a globalised world, we need a uniform set of rules to ensure fair competition among those banks operating globally – only in this way can a reckless regulatory race to the bottom be prevented. for banks conducting the same business activities and bearing the same risks, this means that they should be subject to the same rules. but what about institutions of vastly differing sizes? germany, for me, is the quintessential example of a diverse banking landscape characterised by local and regional institutions : it is currently home to around 1, 700 banks and savings banks, the vast majority of which are not global players. 2 3 / 5 bis central bankers'speeches how can neutral competitive conditions be established in such a system? when it comes to institutions of varying sizes, do uniform rules for regulating and supervising banks not actually contribute to competitive distortion? in my view, the answer is far more straightforward than you might think, and it ’ s not surprising