andreas dombret : the situation in the german banking sector – challenges in striking a balance between weak profitability and the lowinterest - rate environment speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the press conference to unveil the deutsche bundesbank ’ s financial stability review, frankfurt am main, 25 november 2015. * 1. * * banking supervision : successful first year in the ssm ladies and gentlemen before i delve into the risk situation in the german banking sector, i would briefly like to look back with you on year one of european banking supervision. on 4 november 2014, the ecb assumed direct responsibility for supervising the largest 120 or so banks in the euro area. those included 21 german institutions, although the number has risen to 22 in the meantime. given the sheer scale of the project and the very short time available for preparation, many were doubtful about whether european banking supervision could actually work. my answer after one year of the single supervisory mechanism ( ssm ) is : yes, it is working, and i am confident it will continue to meet the high expectations placed in it. cooperation between the ecb and the national supervisors is running pretty smoothly, and we are indeed observing a gradual europeanisation of banking supervision. so i ’ m satisfied with the first year of european banking supervision. there are a few points we can improve on. these include, for instance, decision - making structures and processes. in this regard, i believe that an adequate distinction is still not being made between important processes and routine decisions ; having said that, however, my comments are by no means intended to imply criticism. of course, european banking supervision has heralded a lot of changes, especially for the major banks. communication with banking supervisors is increasingly taking place in english, cross - border peer comparisons between banks are growing more important, and the supervisory approach has taken on a more quantitative slant on the whole. these factors all entail more work for the banks, of course ; but the banks, too, ultimately stand to benefit from improved supervision and a europe - wide level playing field. looking to the future, another topic that ’ s on the table right now is a european deposit guarantee scheme ; indeed, the european commission presented a plan only yesterday. i take quite a critical view indeed of this project because i don ’ t believe that the groundwork has been laid for such a scheme yet. we have a common currency and a

a wallet also containing a digital euro in the future. with a digital euro, future digital payments in the euro area could be carried out independently of non - european payment infrastructures. this would reduce risks and dependencies in payment transactions, which would also be beneficial to financial stability. furthermore, users ’ payment data are increasingly recognised as a valuable good, as some private payment service providers in online trading use them to analyse purchasing behaviour and customer characteristics. if data can be referred to as a commodity of the digital age, this is certainly also true of payment data. in the private payment services market, there are a number of major players with market power. it is therefore difficult for users to get by without recourse to the services offered by these payment service providers. a digital euro could therefore contribute to the protection of payment data, as the eurosystem itself has no interest in using this data commercially. one could expect better protection of privacy for this reason alone. the introduction of a digital euro would be particularly beneficial for consumers if it would allow digital payments to be processed easily, quickly and cost - effectively as well as better protect their privacy when making payments. people would then have access to the digital euro in addition to cash. like cash, it would be issued by the central bank and it would permit digital payment in central bank money. furthermore, depending on the design, the digital euro ’ s infrastructure could open up the prospect of serving as a platform for innovation. in particular, this could apply to automated payment transactions, which are likely to become increasingly popular as digitalisation increases. a wholesale version of the digital euro could make progress possible, especially for largevalue payments, which are common amongst eurosystem banks and counterparties. this option would be limited to a specific user group and would provide an opportunity to process payments efficiently and automatically. at present, discussions in the eurosystem are mainly focused on the retail version, i. e. ( that is ) a digital euro for everyone, but a wholesale variant could also be provided if the need for it is there. this requires potential users to let their needs be known. however, regardless of whether people are paying large amounts or just enough for a coffee, the digital euro should help to save time, sometimes our nerves, too, and maybe even money. transaction fees are high particularly for payments across currency areas, which brings me to my next point – the role of cbdc ( central bank digital currency ) in cross - border