be an efficient system. that is precisely why we should make similar arrangements for the new european supervisory mechanism, with the bundesbank performing ongoing supervision, and the ecb taking the decisions. bis central bankers ’ speeches it just so happens that, at the same time as we are holding this forum, germany ’ s federal cabinet is discussing amendments to the german banking act ( kreditwesengesetz ) today. the cabinet will consider whether changing this division of tasks and interrupting the direct reporting channel from the bundesbank to the ecb constitutes “ good regulation ”. i doubt it. i believe that the bundesbank has to be on an equal footing with the other supervisors. that is the only way to ensure effective european - level supervision. 4. conclusion and outlook ladies and gentlemen, the french writer francois fenelon once claimed that, “ the more you say, the less people remember ”. as this obviously isn ’ t my aim, i would like to conclude my remarks by taking a peek into the future. the past history of regulation has been one of constant ups and downs. periods of deregulation have usually been followed by a crisis, then followed by a period of reregulation, and again by a period of deregulation. it is precisely in phases of re - regulation that banks tend to complain about the time and money it costs – and the present period is no exception. but are we really overregulating? if we look at the benefits to society of a stable banking system and the social costs of a banking crisis, i believe the costs of regulation are justifiable. however, for the future i would like regulation to evolve somewhat more steadily and adapt more quickly to new challenges : the low - interest - rate phase, high - frequency trading, charges of manipulating the libor or the setting of forex rates and gold prices, to name just a few examples. we should not wait until the aftermath of the next crisis to come up with ways of responding to these challenges. i do not believe, however, that regulators and supervisors are all - knowing and all - powerful. as i noted at the beginning of this speech, we can only maintain financial stability if we work together. you, the bankers, are just as responsible as us, the supervisors and regulators. i am well aware that the number of “ bad apples ” is very small. however, their behaviour causes all of us to suffer : the public, when a crisis breaks

as across borders, regions and sectors. fourth, regulation must be guided by the principle of proportionality. abiding by these principles will not, of course, allow us to solve every single regulatory problem. yet they do provide us with a yardstick for assessing regulatory provisions. and i do believe that is very valuable. 3. what is “ good supervision ”? all in all, though, even the best regulation is useless if nobody is overseeing compliance. and that is precisely the job of supervisors. supervisors have to make sure that, in the banks ’ search for profit, they follow the rules and do not lose sight of the public interest. do supervisors have to be the “ better bankers ”? no, absolutely not. business decisions must be left to those being paid to make them. however, supervisors have to know – and understand – how banking works. against this background, i personally would very much welcome an increase in the migration of staff between the banking industry and the supervisory agencies. i therefore consider it a good sign that a large number of bankers have been applying to join the ecb ’ s new european supervisory mechanism. and at the bundesbank we are also noting a rise in the number of bankers showing an interest in and applying for vacancies in our banking supervision units. it is also important for supervisors to always remain aware of their true objective : to uphold the public interest. they must not allow themselves to succumb to a sort of “ stockholm syndrome for supervisors ” and confuse the public good with that of the supervised banks. bis central bankers ’ speeches 3. 1 the new european supervisory mechanism... this is an area where the new european supervisory mechanism can make a key contribution. by adding a european perspective to the national view, it will put more distance between the supervisor and the supervised entity. this will minimise the danger of supervisors getting all - too - close to their banks and thus treating them with “ kid gloves ” out of national interest. all in all, european - level supervision is the most important step towards financial market integration in the euro area since the launch of our single currency. it is a logical step, too, since a single monetary policy also requires integrated financial markets – which includes, without doubt, european - level supervision. an in - depth examination of all banks which will later be supervised directly by the ecb is now underway. the objective of this comprehensive assessment is to ensure that the new european supervisory authority has a smooth launch. we