eu will have to find new ways of accessing the european market after brexit. and this is relevant for us supervisors, of course. over the past two years, we have clearly set out what we expect from banks relocating to the euro area. we have published information on our website ; we have talked about the issue in interviews and speeches ; and we have had intense discussions directly with the banks. we have urged and pushed them to prepare for all potential outcomes of the political process. at present, most banks relocating to the euro area have made reasonable progress in preparing their move. but it ’ s not just banks located in the united kingdom that will be hit by brexit. euro area banks rely, for instance, very much on central counterparties, or ccps, in the united kingdom to clear derivatives. with brexit, they might lose access to these services, and this might disrupt their business and the markets, and in turn threaten financial stability. the european commission has 3 / 6 bis central bankers'speeches acknowledged the problem and plans to take temporary measures to preserve access. while this is certainly good news, it is merely a stopgap. there is no time to relax ; there is just a little more time to prepare. now, brexit at least offers an opportunity to think about ccps and concentration risk in more general terms. the market for clearing is highly concentrated. while i do see the benefits in terms of efficiency, i also see the risks. and this is something we definitely need to discuss. i have now focused on two challenges that are more or less european : npls and brexit. there are, of course, many more challenges, and these affect banks not only in europe but worldwide. there are geopolitical uncertainties, for instance. it seems that nationalism and, thus, protectionism, is on the rise. in the long run this will hurt the economy and everyone will be worse off, including those who appear to benefit from protectionist measures at first glance ; the current trade tensions are a case in point. then there are financial market risks. interest rates are low and liquidity is still abundant and cheap, but these conditions will not last forever ; there is the risk of a snapback in markets. at the same time, technological progress might change the business of banking and the structure of the sector. this could be an opportunity ; but it may also be a risk if banks fail to adapt. risks from the

a bank to be safe and sound without assessing its governance framework? as part of our srep, we also assess the banks ’ risk appetite frameworks, their rafs. we look at whether banks are fully integrating the policies, processes, controls, systems and procedures set out in their raf into their decision - making processes and their risk management. we also assess whether their raf is aligned with their business plans, strategies, capital planning and remuneration schemes. easier said than done, as i ’ m sure you know. we do not look at banks in isolation. as i just mentioned, benchmarking is a key supervisory tool. we carry out horizontal analyses on a host of issues, including governance, which was the subject of a thematic review we published in 2016. 4 however, all of this is still work in progress – for supervisors and for banks. that banks are not yet where they should be becomes clear when we look at the recent scandals in the headlines : money laundering, tax evasion, manipulation of rates and prices – you are no doubt familiar with these cases. they are not confined to a single region, nor to a single bank. while good governance can take banks a long way in behaving responsibly, we have to dig deeper. ultimately, ethical behaviour is either helped or hindered by a bank ’ s culture. so we do not want to see a culture that tolerates misconduct or even encourages it. but it is not in a supervisor ’ s power to shape a bank ’ s culture. ultimately, the onus is on the banks and their stakeholders to bring about a cultural shift. the first step is to understand that staying in business for the long term is more important than ramping up profits in the short term. in that sense, a good reputation is worth more than a dodgy deal – no matter how much profit that deal promises. shareholders, too, should focus more on the sustainability of a bank ’ s business model, and thus their investment, and less on receiving as high a dividend as possible in the short run. this understanding is only the first step. the culture of a bank is shaped both ways, top - down and bottom - up. the management of a bank plays an important role in setting the tone and defining expected behaviour. but this is not enough. when it comes to culture, action speaks louder than words. staff will take the behaviour of management as a cue of what is acceptable and what not. managers