mario draghi : ecb press conference - introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 12 september 2019. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today ’ s meeting of the governing council. based on our regular economic and monetary analyses, we have conducted a thorough assessment of the economic and inflation outlook, also taking into account the latest staff macroeconomic projections for the euro area. as a result, the governing council took the following decisions in pursuit of its price stability objective. first, as regards the key ecb interest rates, we decided to lower the interest rate on the deposit facility by 10 basis points to – 0. 50 %. the interest rate on the main refinancing operations and the rate on the marginal lending facility will remain unchanged at their current levels of 0. 00 % and 0. 25 % respectively. we now expect the key ecb interest rates to remain at their present or lower levels until we have seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2 % within our projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics. second, the governing council decided to restart net purchases under its asset purchase programme ( app ) at a monthly pace of €20 billion as from 1 november. we expect them to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ecb interest rates. third, we intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the app for an extended period of time past the date when we start raising the key ecb interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. fourth, we decided to change the modalities of the new series of quarterly targeted longer - term refinancing operations ( tltro iii ) to preserve favourable bank lending conditions, ensure the smooth transmission of monetary policy and further support the accommodative stance of monetary policy. the interest rate in each operation will now be set at the level of the average rate applied in the eurosystem ’ s main refinanc

over a very long distance. and competition in the banking industry is becoming increasingly tougher and more international. not only competition for customers, but also competition for investors. global regulation and european supervision are creating an international “ level playing field ” in which investors will put their funds where the returns are greatest. german banks are therefore increasingly being forced to face international competition. and they are not performing all that well. in the current issue of its global financial stability bis central bankers ’ speeches report, the imf notes that return on equity in the euro area is low compared with that in other regions such as the united states or asia. 1 german banks are underperforming the rest of europe, too : in 2013 their return on equity, at 1. 26 %, and return on assets, at 0. 06 %, were both below the european average. a recent study has concluded that currently only 6 % of germany ’ s banks even earn enough to cover their cost of capital. 2 a business model which is relatively dependent on interest income is the main culprit for these weak earnings. in a protracted phase of very low interest rates, this imposes a particularly severe strain. at the same time, commission income and net trading income are insufficient to provide adequate compensation. given these factors, german banks would be well advised to rethink their business models and to gear them towards the objective of sustainable profitability. however, the imf sees germany as being more towards the bottom of the international rankings with regard to overhauling business models. there is yet another important aspect to profitability : if the circuit is clogged with runners, they will get in each other ’ s way. mergers could therefore be beneficial, particularly in the german banking industry – the focus here should, of course, always remain on achieving a sustainable business model. to sum up : in the comprehensive assessment, german banks demonstrated that they are robust enough to withstand even severe stress but have to increase their profitability in order to cross the finishing line at the front of the pack. 3. stability – much progress already made but a good deal left to do however, investors are not only interested in banks ’ profitability but also in their stability – and the same is true of us supervisors, of course. and when measuring a bank ’ s stability, capital is still the crucial factor. the stress test has shown that german banks are sufficiently capitalised even in a very adverse scenario – after all, the german banks that were