%, which, while still high, is certainly manageable. nevertheless, there is still room for greater consolidation because their cost ratios, while not the highest in the euro area, are still too high. profitability remains weak, although there are substantial differences between banks. while there is a need for more consolidation, preserving a diverse banking system, with both large and local banks, remains important. the banks are blaming low rates for their reduced profitability. yes, they are, but at the same time they are also recognising the favourable effects of low rates on improved economic conditions and the need to change business models and reduce costs. over time, the economic recovery will increasingly support bank profitability. the deposit rate will remain low, but the last series of targeted longer - term refinancing operations ( tltros ) that helped banks have already come to an end. the banks benefitted greatly from these operations, which were heavily subscribed. the transmission of the ecb ’ s stimulus measures through the banks is working well at the moment. credit conditions have improved sufficiently, so there is currently no need to renew the tltros. and what about the sequencing of monetary policy normalisation? the current sequencing of monetary policy normalisation makes a lot of sense. there is no number, period of time in months or anything like that which will determine when interest rates go up after the debt purchases end. this will happen based on the ecb ’ s assessment. it will depend on the kind of situation we find ourselves in. and the deposit rate? the deposit rate is the key monetary policy rate. it is the deposit rate that is currently driving monetary conditions and will in the end shape the risk - free asset curve. if the markets were to pick up any change in communication about the deposit rate, it would have the potential to change the policy stance, and we do not want that to happen right now. 3 / 3 bis central bankers'speeches

18 % of uk banks ’ domestic lending ; if one excludes the real estate sector, however, the figure is closer to 12 %. and lending to smes accounts for only 4 %. businesses borrow for many reasons not simply for investment, and business investment in the uk as a whole is the result of millions of uk businesses assessing the merits of individual investment opportunities, financing options and other considerations. in 2015, in order to get a better understanding of the supply of finance for productive investment and to support the government ’ s productivity plan, the bank initiated research into ‘ productive finance ’. our aim see imf ( 2015 ) ‘ uneven growth ‘, world economic outlook, april 2015. the wilson committee was formed in january 1977 with the following terms of reference :'to enquire into the role and functioning, at home and abroad, of financial institutions in the united kingdom and their value to the economy ; to review in particular the provision of funds for industry and trade ; to consider what changes are required in the existing arrangements for the supervision of these institutions, including the possible extension of the public sector, and to make recommendations.'the committee concluded that the availability of funds was not the prime cause of low industrial investment and identified two areas of concern. first, the reduction of new issues of long - term fixed - interest industrial debentures due to high and fluctuating rates of inflation. and second, that the provision of finance for small firms was generally accepted to be unsatisfactory in a number of respects. see moore, p, g'the wilson committee review of the functioning of financial institutions – some statistical aspect ', journal of the royal statistical society, vol. 144 ( 1 ), pp32 - 65. all speeches are available online at www. bankofengland. co. uk / speeches was to get a better picture of whether firms ‘ underinvest ’ – ie if they turn away profitable investment opportunities and if so what obstacles to investment they face. to do so, we launched a new survey of firms, the results of which are published today. the survey covered a sample over 1, 200 firms. it is representative of the population of uk firms across regions, industries and size. some caveats are required here. in the survey responses there was an under - representation of younger firms. this makes the results less informative about the investment behaviour and financing needs of younger companies, particularly of start - ups. moreover, as this is the first