has been laid, and as far as the european deposit insurance scheme is concerned, we shouldn ’ t take the second step before the first. second, german banks have boosted their stability still further – equity capital ratios are up again, leverage is down again. that ’ s good news. third, persistently weak earnings are taking their toll on german banks. the low - interest - rate environment will particularly make itself felt at small and medium - sized institutions over a medium to long - term horizon. institutions will need to tackle these challenges head on if they are to safeguard their stability and profitability. my advice to them is this : there ’ s no blueprint for guaranteed success. but what i can say is that besides regularly reviewing their business models, credit institutions should also consider further mergers, a more streamlined branch network and other cost - cutting measures. thank you very much. 5 / 5 bis central bankers'speeches

- performing loans are still unresolved in a number of countries, which means the risk situation differs strongly from one national banking system to the next. i will return to this particular point later in my statement today. while a recently published draft report by esther de lange at the european parliament does already address some of the criticism levelled at the commission proposal, that paper indicates that the proposed initial re - insurance phase starting in 2019 will still take place without any riskreduction measures whatsoever. that would be inacceptable in my view. my conclusion from this is that we should stick to the current system – harmonising the national deposit insurance schemes – as long as many outstanding issues remain unresolved. for all the progress that has been made towards deeper integration, european unity suffered something of a setback on 23 june this year. that was the day on which the uk electorate voted against the country ’ s continued membership of the european union. that brings us to the topic 1 / 5 bis central bankers'speeches of “ less europe ". i won ’ t wade into the political debate today, but focus instead on what brexit means for financial markets. five months on from the uk referendum, we can say that the european financial system has done a pretty good job overall of absorbing the outcome of the vote. apart from a bout of heightened financial market volatility, notable share price losses, particularly among bank stocks, and the sharp depreciation of sterling, the brexit vote did not unleash any turmoil in financial markets, nor, might i add, was there ever any risk of a financial crisis. there are two reasons for this. first, the good level of resilience that has now been achieved in the european financial system. second, and no less important, the response shown particularly by the bank of england. nonetheless, the long - run repercussions of the brexit vote will only really come into view when we get a better idea of the outcome of the forthcoming exit negotiations. the signals which the uk government is currently sending out would appear to suggest that a “ hard brexit ” might be in store – that is, the uk would leave not just the eu but also the european economic area. that would spell the end of the current eu passporting regime – an arrangement which presently enables financial institutions domiciled in the uk to offer their products and services across the entire european economic area. it also permits continental european institutions to