harmful sovereign - bank nexus, the preferential regulatory treatment of government bonds, too, would have to cease. this is an anachronism based on the false assumption that government bonds are risk - free investments. the crisis has vividly demonstrated that investments in government bonds, too, entail risks. at present, no large exposure limits are in place for government bonds – nor are banks required to back government bonds with capital. under the current capital rules, a zero risk weight applies to these assets, which means that these government bonds can be fully funded with borrowed money, which gives them an advantage over lending to the private sector. this preferential treatment has been a factor in banks in several euro - area periphery states, in particular, raising their exposure to domestic government bonds during the crisis ; they have thereby tied even more closely their fate to that of their national government. banks tend to circumvent the liability principle in this way. if all goes well, banks pocket a decent profit owing to the crisis countries ’ comparatively high bond yields and the favourable refinancing rates. however, if the government were to become insolvent, the consequences for banks would be negligible as they would ultimately have to be resolved in any case. for this reason, i have for quite some time now been calling for government bonds to be backed with a level of capital that adequately reflects the risk and for caps to be imposed on such investments, as is commonplace for loans to private debtors. and i am glad that federal finance minister schauble has come to share this view. at a bundesbank conference some weeks ago he said : “ this issue must be put on the political agenda. ” meanwhile, he will need to persuade his colleagues in the more highly indebted countries ; after all, zero - weighting is a major selling point for government bonds, including those with a lower credit rating. in conclusion, it can probably be said that a great deal has been set in motion to make the financial system more robust, but a lot remains to be done. what is clear, and i would hereby like to wrap up my comments on the reform of the operational framework of monetary union, is that a stable monetary union cannot exist without a stable financial system. conclusion ladies and gentlemen, at the end of my speech i would like to once again express my gratitude for being awarded the wolfram engels prize. i would also like to thank the informedia foundation for dona

escapes supervision, and ( ii ) that 1 / 4 bis central bankers'speeches supervision is adequate and consistent across member jurisdictions. one of the main tasks of the committee is the development of international minimum standards for banking regulation and supervision. these are intended to reduce the opportunity for regulatory arbitrage. and in the process, they reduce the likelihood of a regulatory race to the bottom. you might see a lack of certain objectives that may be important to you here : to harmonise the legal environment for banks that operate internationally or to facilitate cross - border provision of financial services. and indeed, these are not explicit aims – and that differs from eu regulation – but to a certain extent, the standards lead to such harmonisation. as you can imagine, decision - making at the bcbs is not always easy. with the involvement of many people representing various interests from different jurisdictions and financial systems, finding compromises is hard. we have to reach a consensus. more than 20 working groups and subgroups have been set up to hammer out details. the book of standards today comprises over 1, 600 pages. international cooperation is a marathon, not a sprint. that is why the bcbs, just like many other international institutions, sometimes seems like a slow tanker and not a racing boat. but this does not diminish its value. the work of the bcbs is not limited to agreeing on standards. standards can only work as intended if they are implemented into the national law of every member state. the bcbs publications do not have a formal legal character. but even though the standards are only non - binding agreements, they are typically implemented in more than 100 countries – far beyond the official membership of 28 jurisdictions. the committee monitors the implementation of its standards. in addition, it reviews the consistency and completeness of implementation across member countries. we in the eurosystem and at the deutsche bundesbank pursue the goal of fully compliant implementation. otherwise, we have failed to achieve a truly international framework. all in all : the basel standards are a huge success. the current crisis due to the pandemic is good proof of this. 3 pros and cons of international regulation i like to think of the bcbs as an example of the value of international cooperation. thanks to its work, banking regulation has a fairly successful track record of international cooperation – and this brings me to my second point : the pros and cons for supervised entities, supervisors and the financial system as a whole. for supervised