requirements, reductions in the granularity of reporting requirements and a simplified form of the net stable funding ratio ( nsfr ). in deciding which areas could potentially be simplified, we must weigh up the benefits of regulation – that is to say, the preservation of financial stability – against the costs generated for the private sector. essentially, all regulations that are non - essential to effective supervision are up for discussion. conversely, that also means that many rules are not up for debate, however. as i have already mentioned, no concessions can be made, in particular, when it comes to the risk - weighted capital ratio, the leverage ratio or the short - term liquidity coverage ratio. 3 / 5 bis central bankers'speeches one other aspect, i believe, is particularly crucial. the business models of small banks are neither generally simple nor automatically low - risk – and that is especially true when seen in their entirety. a supervisory system that works according to the principle of proportionality therefore needs to be simple but also robust. financial stability must not be jeopardised under any circumstances. 5. finalised basel iii standard must be implemented proportionately for the same reason – that is, to strengthen financial stability – it is very important that we implement the recently finalised basel iii package fully in the eu. after all, that ’ s no less than we expect of the us and the other member countries of the basel committee. but as i see it, full implementation of the basel iii rules doesn ’ t mean that all banks need to be affected by these highly complex rules to the same extent. to recap, the basel standards are primarily aimed at internationally active banks. in this regard, member countries of the basel committee are free to apply other rules to smaller banks that are only active in their own home markets and do not pose a threat to international financial stability. and this is the framework we should largely use when revising the eu rules. for instance, when it comes to a review of the trading book, we at the bundesbank are in favour of retaining the simple, standardised approaches that are currently in place for small institutions with small trading books. although the new, complex standardised approach is all well and good for institutions that engage in substantial trading activity, i don ’ t think they are suited to locally based savings banks or people's banks. we also support the idea put forward by the european commission and the european parliament of excluding development banks from the scope of the crd /

crr regulatory framework. given, above all, the particularities of the business models of german development banks and their public mandate, i fail to see why these institutions should be subject to complex international regulation. in this respect, we at the bundesbank strongly support the concept of a criteria - based exemption rule for development banks. we are also calling for institutions with total assets in excess of €30 billion to be covered by an exemption. in doing so, we are going beyond the european commission ’ s draft proposal. the report published by the european parliament, too, follows a similar train of thought under certain conditions – which means that it ’ s now up to the german negotiators in brussels to set the right course. so what i am saying is that when implementing the basel iii reforms in the eu, the rules must be applied in full to internationally active banks. but when it comes to smaller banks that are not internationally active, first, we should focus specifically on reducing the operational burden by scaling back or removing inappropriately complex rules. and second, we need to check whether it would be possible to exempt entire groups of institutions such as development banks from the european regulation. 6. conclusion ladies and gentlemen, the euro area is experiencing impressive economic growth again for the first time in a decade. a differentiated banking system is a key pillar of the economy – and i am convinced that this diversity makes our economy more dynamic and more resilient. and we must be careful not to burden this differentiated banking system unnecessarily through regulation. for us, as supervisors and regulators, this means addressing parts of the banking regulation that have become overly complex. we should not place any disproportionate obstacles in the way of small institutions and savings banks. it is now up to the european parliament, the eu council of ministers and the european 4 / 5 bis central bankers'speeches commission to pave the way for substantial improvements. together with my banking supervision colleagues at the bundesbank, i will continue to strive for greater proportionality in banking supervision. the current developments in brussels give us reason to be optimistic. 5 / 5 bis central bankers'speeches