regulated. generally speaking, this group includes institutions with total assets of over €20 billion. nothing will change for these institutions : all of the basel iii requirements will still apply, as will the additional capital buffer, the total loss absorbing capacity, and so on. a second group would include institutions which are not large and systemically important, but which are also not small and low - risk, which is why it is not possible to make any extensive simplifications for them. nonetheless, the proposal does include for this middle group some targeted relief measures which could be achieved by making specific amendments to the current regulations. finally, the third group is made up of small and non - complex institutions – the banks that are most affected by the fixed costs of regulation without their systemic importance being considered individually. this group – the largest in numerical terms – is to have its cost burden alleviated radically by means of a separate regulation : the small banking box. the burning question now, of course, is which institutions belong in which group – and particularly, which banks could be included in the small banking box. i will say right off that i am not able to conclusively answer this important question today. these classifications have to be balanced carefully, and we will do this as part of european - level discussions. 6 / 13 bis central bankers'speeches i would, however, like to give you an initial idea of how this classification might look. by talking of small institutions, this suggests that a qualification criterion for the small banking box would be relatively modest total assets. for example, in germany, a total assets threshold value of €3 billion could put more than 80 % of institutions into this category. what constitutes large and small in other member states is completely different, however. to account for this heterogeneity, absolute size would have to be supplemented with relative size. 7 / 13 bis central bankers'speeches this could be the ratio of the bank ’ s total assets to its home country ’ s economic power or the size of the domestic banking sector, though in this case, too, size isn ’ t everything. i ’ ve already said that not only do institutions in the small banking box have to be relatively small, they also must not be too complex. this is why we need additional criteria. first, only institutions that we believe would be subject to insolvency proceedings in the event of resolution may be part of the box. second, candidates for the small banking box must not engage

decisions on a case - by - case basis. in other words, just because a bank ’ s total assets fall below a specified threshold, that is nowhere near enough for it to be included in the small banking box. second, we are discussing introducing transitional arrangements to help make it easier to switch between regimes – something that we want to be an option. ladies and gentlemen, a sensible and workable definition of institutions whose burden could be relieved is perfectly feasible. and while it may appear that way at first glance, creating the small banking box does not necessarily require a whole new set of rules. all that is needed is a short section in the crr dedicated to the issue. 9 / 13 bis central bankers'speeches 5. 2 the question of “ what? " : reducing the paperwork that leaves the second key question : what exactly might the box look like? let us start at the heart of the problem, namely, the paperwork which the complex requirements create in various areas. some of these requirements could be completely eliminated for institutions in the small banking box. i could, for instance, imagine largely exempting small banks from disclosure requirements and abolishing remuneration rules for them. in addition, they could be absolved from recovery and resolution planning. full exemption from other requirements would be a step too far. but that should not prevent us from trying to make things easier for small banks. for example, reporting could be reduced to a core reporting process – a standardised reporting approach, if you like. a simplified form of the net stable funding ratio ( nsfr ) is also up for debate. when designing the small banking box we must weigh up the benefits for supervisors, ie ensuring financial stability, against the burden it creates for banks. as a rule of thumb, we can say that any rules that are dispensable for effective supervision are up for negotiation. 10 / 13 bis central bankers'speeches 6. limits of the small banking box conversely, however, that also means that a lot of rules are not up for debate. and that brings me to the limits of the small banking box. i will not beat about the bush : there can be no concessions in terms of risk - based capital ratios, the leverage ratio or the short - term liquidity ratio. and the list goes on. small banks ’ business models are neither per se simple nor automatically low - risk – and that is particularly true when looking at them as a whole. the new regime must therefore be simple yet