according to the proportionality principle. here, harmonisation comes up against a boundary which is both reasonable and necessary. in public discussions proportionality is often tied to the size of the institutions. this makes the discussion easier, but it can also lead in the wrong direction. the decisive factor should be the bank ’ s systemic importance. and at the latest since the savings and loans crisis in the united states in the 1980s, we know that even small banks may still be systemically relevant – “ too many to fail ” is as big a problem as “ too big to fail ”. the wording of the legal basis of european banking supervision with regard to proportionality is correspondingly broad. it reads as follows : “ when carrying out the tasks conferred on it, and without prejudice to the objective to ensure the safety and soundness of credit institutions, the ecb should have full regard to the diversity of credit institutions and their size and business models ”. in european banking supervision, proportionality is clear to see : while the 129 biggest banks in the euro area are directly supervised by the ecb, the smaller institutions, some 3, 200 of them, are overseen by the national supervisors. only in specific cases and under certain conditions does the ecb directly supervise smaller institutions – and in such cases the question may be asked whether that is appropriate at all. normally, the ecb only plays a secondary role in the supervision of smaller institutions – its task is to be in the background supporting national supervisors. so we are developing, together with national supervisors, high - quality standards which take account of regional factors, size, business and risk of the individual institutions, and are correspondingly adaptable. this kind of harmonisation does not aim to be a levelling - down. it is not a question of replacing national supervisory approaches by a european one. on the contrary, we ensure bis central bankers ’ speeches that the key elements of the supervision attain certain minimum standards. then national specificities can be taken into account, but only if they are justified from a risk perspective. the principle of proportionality also takes us into areas which go beyond the general supervisory standards. and i would like to take the opportunity to clear up a widespread misunderstanding. again and again, people tell me that the ecb is imposing who knows how many reporting obligations on small and medium - sized institutions. let me give just two examples that show that when it comes to reporting we certainly work in line with the principle of proportionality. under the

also more fairly. before drawing to a close, let me say a word on the prospective single supervisory mechanism and the role that the ecb shall take on. later this year, once the legal texts have been adopted, the ecb will assume a major new responsibility to prepare for becoming the new euro area banking supervisor, as home and heart of the single supervisory mechanism. this will be a major organisational challenge. internal work is already underway. you can rest assured that we will work hard to ensure that the ecb will deliver on its responsibilities to the highest possible standard. in the first press conference on this matter, when the single european supervisor had not yet been decided, i said that if it were to be the ecb, the following five principles would need to apply : • the framework for supervision had to be effective and ensure coherent oversight ; • supervisory decision - making and monetary policy had to be clearly separated ; • national supervisors decentralisation ; • the single market had to be preserved for countries that did not join ; and finally, • there had to be full democratic accountability. had to be properly involved through appropriate conclusion ladies and gentlemen, the establishment of the supervisory function in frankfurt is a further tribute to the city as a financial centre. the ecb will also continue to contribute to the cultural life of the city, not least through the ecb cultural days that we organise every year and which this year will focus on latvia. and in the eastern part of the city, we will see the großmarkthalle emerge in its former glory together with our new tower that is scheduled for completion next year. let me conclude. we begin 2013 with more confidence than we had in january one year ago. this confidence is to a large extent built on the progress that all of us – governments, parliaments, the eu and the ecb – have been able to make during 2012. but it is also crucially built on the expectation that progress will persist. the ecb for its part will be there to continue, as it has done successfully now for 14 years, to safeguard price stability. thank you very much for your attention. bis central bankers ’ speeches