fiscal rules. conclusion ladies and gentlemen, resilient banks are the essential building block of financial stability. with a view to regulation we have come a long way since the recent crisis. we have reformed the regulatory framework in a way that will help to increase banks ’ resilience. at the same time we have acknowledged the fact that we have to look beyond the individual bank if we want to safeguard financial stability. thus, although we are on the right track, we should probably move a bit faster with regard to implementing the new rules and standards. but what about the banks themselves? have they finally understood their role in the recent crisis? have they looked beyond their own losses and realised the burden they have put on society? i have argued that we have to look beyond the individual bank to safeguard financial stability and what i was referring to was the systemic perspective. but we also have to look beyond the banks to capture the personal perspective. eventually, it is the bankers ’ attitude and culture that are the most essential building blocks of financial stability. here we still need a change. bankers have to subscribe to the idea that the financial system is, in essence, a service provider for the real economy. thank you. bis central bankers ’ speeches

andreas dombret : resilient banks – essential building blocks of a stable financial system speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the 18th annual banking and insurance conference “ making finance work in a higher capital world ”, organized by bank of america merrill lynch, london, 24 september 2013. * * * introduction ladies and gentlemen many thanks for inviting me to this year ’ s conference. it is a real pleasure for me to speak before you today because i spent many years of my career in the private sector. today, however, i speak to you as a central banker and thus from a regulator ’ s point of view. from time to time banks and regulators are portrayed as opposing forces. to me, this seems a bit off the mark – not least because i know both sides rather well. in the end we all share the same objective : a stable financial system. and a natural starting point from which to build a stable financial system is the individual bank. banks are the elementary building blocks of the financial system and to ensure financial stability we need resilient banks. what defines a resilient bank? but what is a resilient bank? to begin with, a resilient bank is able to withstand shocks. a resilient bank enjoys the confidence of investors and customers. thus, it will receive funding – both wholesale and retail – at adequate prices even during periods of stress. but how do investors and customers recognize a resilient bank? is it like the famous giraffe : hard to describe but you know it when you see it? well, there are certainly times when this is the case. usually, however, resilient banks have specific characteristics that set them apart from other banks. in my remarks today i would like to discuss three of these characteristics – three pillars on which resilient banks rest. 2. 1 capital and liquidity buffers capital and liquidity buffers should be regarded as the centre pillar. capital provides a cushion to absorb losses during times of stress. and with the benefit of hindsight, it is now widely acknowledged that prior to the crisis banks ’ capital buffers were neither high nor solid enough. the same is true for liquidity. banks ’ role in financial intermediation makes them particularly vulnerable to liquidity risks. and a lack of liquidity can break a solvent bank ’ s neck. after all, a liquidity squeeze was the defining element of the