the way forward for the european union. at the moment, we seem to be steering more towards the “ fine print ” approach, which the financial stability institute calls the “ specific standard approach ". but in the end, it ’ s not the name that matters, and the form is only of secondary concern. what matters is the content, i. e. the question of “ what ". and here, the most recent european parliament report is promising. importantly, the focus lies on reducing the administrative burden. we will aim to literally reduce the paperwork the complex regulatory requirements create in various areas for small and lowrisk institutions. among the measures we are looking at are exemptions from disclosure requirements, reductions in the granularity of reporting requirements, and a simplified form of the net stable funding ratio ( nsfr ). all of this is very close to what the bundesbank has proposed and supported in the past. when assessing potential areas for simplifications, we must weigh the benefits of regulation – that is, ensuring financial stability – against the burden it creates for the private sector. as a rule of thumb, we can say that any rules that are dispensable for effective supervision are up for debate. conversely, however, this also means that a lot of rules are not up for debate. most importantly, there can be no concessions in terms of risk - based capital ratios, the leverage ratio or the shortterm liquidity ratio. and the list goes on. small banks ’ business models are neither per se simple nor automatically low - risk – and that is 4 / 5 bis central bankers'speeches particularly true when looking at them as a whole. a proportional regulatory regime must therefore be simple yet robust. financial stability must not be put at risk. 6. taking proportionality to the international level ladies and gentlemen, i am convinced that proportionality is a highly relevant topic – for europe as well as for other countries and regions. for this reason, i welcome the fact that the basel committee, too, recently addressed this topic. the committee has reaffirmed two important things. first, it will stick to its original purpose of being a standard setter for the regulation and supervision of large, internationally active banks. second, it considers proportionality as being a relevant topic. therefore, the committee wants to examine the topic further, for example by conducting a stocktake of existing proportionality approaches. this will provide us with greater transparency as to how banking regulation works for smaller

size in the banking sector. this needs to change. i am convinced that we need to strengthen the principle of proportionality in banking regulation. now some of you might want to stop me at this point and ask : how do you reconcile that with the full and consistent implementation of basel iii that you just advocated? to answer this, let me point to the original idea of the basel rules. the task of the basel committee was, from the outset, to create globally harmonised rules for large, internationally active banks to ensure that they are stable and operate on a level playing field. over time, and especially with basel iii, this resulted in an increasingly complex regulatory framework – a reflection of the mounting complexity of the global banking business. this complexity is warranted for large, interconnected banks, and the sector ’ s global players are certainly in a position to get to grips with the complex rules. but in actual fact, the bulk of these rules, especially in europe, apply not only to major multinational institutions but to every single bank including small savings banks and the majority of cooperative banks. and that has turned out to be quite a problem. because small and medium - sized institutions do not benefit from the same economies of scale that their larger rivals can harness. for example, small institutions face much heavier costs, relatively speaking, when they invest in itinfrastructure or hire additional employees for their compliance department. the implementation of the basel framework in european regulation today already takes account of proportionality to a certain degree. but in practice, i repeatedly encounter situations where, in my view, the existing gradations are inadequate. so the proportionality principle is nothing new, but it hasn ’ t been anchored deeply enough yet. i am very convinced that proportionality is important – for several reasons : it ensures fair competition on a level playing field. it prevents the unwanted side - effect of structural policy through regulation. it strengthens the principle of risk - oriented supervision. it prevents regulation from unnecessarily hampering efficiency. all in all, i think that proportionality is necessary to safeguard the original goals and spirit of the basel framework. 5. addressing proportionality in europe the european union is acknowledging this, and we are taking action. the process started back in 2016 with an initiative launched by the finance ministers from the uk and germany. as we at the bundesbank also felt strongly about the topic, we went public with the first set of specific proposals for addressing proportionality in