andreas dombret : basel iii - goal within sight opening speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the bundesbank symposium on " banking supervision in dialogue ", frankfurt am main, 15 march 2017. * * * 1. introduction ladies and gentlemen i would like to warmly welcome you to this year ’ s bundesbank symposium. i am delighted that this year, too, so many of you have decided to join us at kap europa, where our event is once again fully subscribed. precisely one week ago a sensational news story was making the rounds. no, the basel committee didn ’ t complete the basel iii reform package just in time for our symposium. the influence of this symposium doesn ’ t stretch quite that far, unfortunately... i am taking about the sensational discovery in egypt, where archaeologists discovered a statue of ramses ii weighing seven tonnes and towering nine metres high. so why on earth am i telling you this? what does ramses ii have to do with basel iii? after all, my speech is supposed to be about the basel iii reform. allow me, if you will, to keep you in suspense a little longer and reveal the answer to this question at the end of my speech. 2. are we there yet? the current status of negotiations ladies and gentlemen, we are very close to concluding the basel reforms. and the closer we get to the end, the more we turn our attention to what these reforms will mean. many institutions are worried, not least in germany. what will the overall package look like in the end? will the new standards be too strict? and how can the new requirements be fulfilled? these are all questions that are being asked, and rightly so. after all, banks and savings banks have seen extensive reforms since the financial crisis, and they are afraid that the reforms will go even further and might be too much for them to cope with. this is why the reform is also often referred to as “ basel iv ”... but how justified are these fears? this is what i want to talk about today. let ’ s start off by looking at the facts. what is the status of the negotiations and what can we expect? first of all, let ’ s just remember that a large part of basel iii has already been fully agreed on and implemented. that said, the final parts are still missing. this concerns, in particular, the

subject to additional strain or may even see some relief. and that is not an undesirable side - effect of the reform, but its main achievement. the idea behind the basel reforms is ultimately to create incentives to encourage responsible bank governance. and the best way to do this is by means of risk weighting. these incentives do, of course, work in both directions : they make certain activities more expensive and make others more attractive. on the whole, i am convinced that all banks will benefit in future from a fairer distribution of the capital requirements within the banking sector. furthermore, the successful implementation of the reform package can help to further calm the markets. it will certainly pay off ; last year we did, after all, see growing fears that european banks were undercapitalised, which meant that their risk premiums continued to climb. ladies and gentlemen, basel iii is not designed to make life difficult for you and your institutions. on the contrary : in the long term, i am convinced that that the entire banking sector will benefit from better rules. that is why the current debate about deregulation in the united states gives me cause for concern. if the americans do not implement the basel iii framework, we europeans will certainly not introduce the new rules unilaterally – and the whole world will suffer the consequences. we learned this lesson from basel ii. of course, i understand that the many regulatory changes over the last few years involve a great deal of effort and that smaller institutions, in particular, are finding them cumbersome. and i am firmly convinced that the basel iii rules do not need to be applied wholesale to small, regional banks. that ’ s why i am pleased to see that the debate about greater proportionality in banking regulation is gaining momentum in europe. we should therefore take an unbiased look at whether the basel iii framework really should apply in full to all banks and savings banks in germany, or whether a less strict approach, in the form of exemptions for smaller institutions, would make sense. by this, i mainly mean exemptions relating to operational requirements. exemptions from capital and liquidity requirements, on the other hand, cannot and must not be made, in the future as in the past. but that ’ s the subject of a different debate. and that debate must not be used as a pretext to do away with basel iii. because today ’ s financial system is not constrained by borders, we need strict global regulatory and supervisory standards