policy has an impact on the banking environment. however, first of all, banking happens in a very complex environment in which no simple causalities apply. in addition, banks are often faced with rather idiosyncratic situations and challenges. more importantly, causalities and responsibilities are not one and the same. while euro - area monetary policy causes alterations in many parts of the economy, its mandate also prescribes clear responsibilities – price stability is an overarching goal. rather, the transformed landscape urges banks to concentrate on their own responsibilities. banks still play an important role in the market economy. nevertheless, they are also part of it. allusions to the past will not lead us anywhere, simply because there is no customary law that provides specific banking services with revenue guarantees. if allusions to the past rely on some shaky profitability indicator, the case is even stronger. as all of you know, the return on equity, one of the key indicators of profitability, can rise when returns increase or equity decreases. before the financial crisis, the weakness of banks was due, in part, to their low capital ratios. high profitability was misleading in quite a few cases. i am convinced that institutions – despite their admonitions – are now comforted by the fact that they have built up their capital, which directly translates into higher risk - bearing capacity. profitability is very welcome, but it should no longer be accompanied by low risk - bearing capacity. instead, any long - term strategy for profitable banking must be built on its value added for 2 / 4 bis central bankers'speeches customers, business partners and society. as europe ’ s low - interest environment persists and digital transformation continues, the economic value of banking services is co - evolving. adaptation is taking place right now. german banks already increased their share of commission and fee income last year. banks will have to lower their high costs and adapt to the digital age in the years to come. which of the traditional business models and organisational set - ups still fit into today ’ s financial landscape? is the revenue pie still big enough for everyone in the banking sector to be guaranteed a slice in the long run? these questions will continue to be asked of the banking sector over the coming years. but forecasts remain presumptuous. while low profitability has many root causes, there are just as many potential ways to provide relief. clearly though, banking has become a tough business. to be fair, public authorities cannot

dodge their own responsibilities, but the scope of these is different. interestingly though, pointing fingers and shifting responsibility are daily fare in a similar fashion. this is particularly true with respect to the relationship between europe and its national constituents. the british referendum may be regarded as a current example. but there are other instances. in banking supervision, a common regulatory framework in the euro area that has been operational for almost two years now, is directed at dampening national interests. keeping institutions credible and effective is an ongoing task. and finding and deploying governance mechanisms that are congruent with our view of european cooperation will continue to be at the forefront of our public duties in the future. 4. role of bundesbank representatives ladies and gentlemen, in a world of broadband internet and market movements synchronising within seconds across the globe, one might question why there is a need to work together like we do here in sao paulo. but, as i have outlined for europe and the european sector, filtering and interpreting our complicated world, remains a challenge. this remains especially true with respect to the globalised financial sector. high - quality information and close cooperation have not lost their value – in fact, i deem them more important than ever. the bundesbank ’ s network of international representatives is in place to comprehensively observe economic developments and the expected evolution of financial markets from within key countries and regions. our representation here in sao paolo is no exception. economic ties are on the rise – just take the increase in direct investment from the euro area to brazil from 1. 6 % in 2008 to almost 4 % in the first quarter of this year. exchanging expertise and nurturing fruitful personal networks with central banks, financial authorities, supervisory authorities, banks and others is more important than ever. dr marc rennert has represented the bundesbank in south america since december 2012. during this time, he has played a vital role in substantially stepping up the exchange of information between the bundesbank and the region ’ s central banks foremost in brazil, colombia, peru, chile, argentina, uruguay and paraguay. during his time here in sao paulo, dr rennert has been committed in particular to deepening ties with the banco central do brasil. one of his milestone achievements was undoubtedly the preparation of a memorandum of understanding formalising close cooperation between the banco central do brasil and the bundesbank with respect to knowledge transfer and education and training opportunities for staff members. more than 12 projects have already been