work together with just a single credit institution, and, in a lot of cases, have done so for many years. nevertheless, the recent financial crisis has not left the relationship between credit institutions and enterprises unaffected. the banks ’ standing was severely damaged, a lot of trust was forfeited, and quips like that by mark twain started making the rounds again. the loss of trust went so far that some enterprises made enquiries at the bundesbank during the crisis about whether they could open an account with us, because they said that they no longer had any confidence in the commercial banks. at the same time, massive government financial rescue packages were being put together – without them it is likely that there would have been a complete collapse of the financial system with even more serious consequences for the real economy. bis central bankers ’ speeches 3. banking regulation : we ’ ll soon be there the financial crisis and the ensuing global financial crisis have made it abundantly clear to us how closely interlinked the financial system and the real economy are. we have learned that institutions can be so large that they can ’ t really be removed from the market – this is known in the debate as the “ too big to fail ” problem. we are also aware that credit institutions ’ bonus systems can get out of hand and generate destabilising effects if they are geared excessively to short - term profits and ignore long - term risks. and we now know that the banks ’ high degree of interconnectedness and phenomena such as herding behaviour can indeed give rise to risks for the financial system, even though each individual bank is stable when viewed in isolation. comprehensive reforms were and are therefore still necessary in order to create a secure financial system that reliably fulfils its actual purpose for the real economy. and that is why we have seen many new regulatory initiatives over the past few years. today, seven and a half years after the collapse of lehman brothers – which for many was the beginning of the financial crisis – we are significantly closer to our goal than ever before. in response to the financial crisis, the g20 countries have worked on improving the resilience of the individual banks. strengthening the individual banks as the smallest component part of the financial system strengthens the system itself. with this goal in mind, in 2010 the basel committee on banking supervision adopted a regulatory framework, called basel iii for short. the first step set out in this framework was to overhaul the capital requirements in place for credit

will take time and remain fragile. many enterprises saw their sales drop during the spring, dramatically in some cases. this is, of course, partly a consequence of the health policies that were put in place to contain the pandemic. but consumers and businesses also adapted their behaviour voluntarily in order to reduce the risk of infection. in many cases, firms ’ liquid assets were insufficient to cushion the huge drops in revenue. at the beginning of march, liquidity reserves often did not cover more than two months ’ running costs. take, for example, the accommodation and food service activities sector : its revenue fell by more than 40 % in march – liquid assets only covered roughly 10 % of annual fixed costs and 1 / 4 bis central bankers'speeches interest expenditure. poorer business prospects dampened the banks ’ and financial markets ’ willingness to make funding available. immediately after the outbreak of the pandemic, financial market stress rose abruptly. stock indices collapsed all over the world ; in the bond markets, risk premia rose. at the start of the pandemic, a liquidity crunch was looming in the corporate sector. this could have led to a wave of insolvencies, an increase in unemployment, and significant credit defaults. even firms that had a sustainable business model before the crisis were affected. government measures averted such a liquidity crunch and prevented a spillover to the financial system. tax moratoria and transfer payments, such as short - time working benefits, are among the measures being used by governments to support the real economy. government guarantee programmes facilitated a stable level of lending. for the first time, we can use information from the new european credit register, anacredit, to analyse the current situation. these data show that lending was stable in the spring : in march and april, german banks disbursed and committed roughly as many new loans as they had in previous months. monetary policy measures are supporting bank financing and thus financial markets. the eurosystem is purchasing securities on an unprecedented scale, and it is supplying banks with liquidity. this is one reason why – unlike in the global financial crisis – banks ’ financing costs have barely risen. supervisory measures are enabling the use of capital buffer. thus, the flexibility offered by the regulatory framework is being used on a temporary basis to give banks more scope for lending. swift and comprehensive action was needed to avert a liquidity crisis. elsewhere in the world, governments, central banks and supervisors quickly implemented extensive measures