certainly not to take on more and more risk in the search for yield. in the worst case, that kind of “ quest for yield ” can contribute to the formation of price bubbles. looking ahead, i want to be able to count on bis central bankers ’ speeches the savings banks to run their lending business prudently and responsibly – not least in the real estate segment. and as for the possible answer that savings banks should charge their own depositors negative interest rates – that is something which banks alone should decide at their own discretion, not banking supervisors. as supervisors, we have no intention of intruding on your decisions. the response to the current challenges can probably be found primarily on the cost side – staff resources can be deployed even more efficiently, and operating outlay can be reduced. as a case in point, there are some savings banks which still run a relatively large branch network, and a growing number of them will probably be wondering whether that is still in keeping with customer demand, demographic change and changes in customer behaviour. to sum up : like it or not, we will have to get used to the idea that the persistent low - interestrate environment will take a heavy toll on savings banks ’ bottom line. particularly the pressure on net interest income is likely to intensify further, pushing down savings banks ’ operating results. the good news is that many savings banks do have sufficient resources to hold their own in the medium term, even amid such inclement conditions – provided they aren ’ t hit by a huge wave of write - downs in the future. all things considered, savings banks now need to adopt a strategic and operational stance that will guide them through these choppy waters as best they can. incidentally, it is not just the low interest rates which are forcing credit institutions to rethink their strategic alignment – developments like the growing digitalisation of banking business also need to be considered. 3. reforming protection schemes let ’ s now turn our gaze inwards on the shoal ’ s structure. it ’ s clear that the structure of the savings bank sector will have to change. the reason for this is the need to comply with the requirements of the eu ’ s new deposit guarantee directive and the german deposit guarantee act. these, in turn, necessitate a swift reform of the sector ’ s institutional protection and joint liability schemes. the new eu directive requires all credit institutions to provide their depositors with statutory deposit protection cover of €100, 000 by

c m buch, s eickmeier and e prieto ( 2014 ), in search for yield? survey - based evidence on bank risk taking, journal of economic dynamics and control, 43, 12 – 30 ; and g jimenez, s ongena, j l peydro and j saurina ( 2014 ), hazardous times for monetary policy : what do twenty - three million bank loans say about the effects of monetary policy on credit risk - taking?, econometrica, 82, 463 – 505, for evidence on the effects of monetary policy on risk taking. 2 deutsche bundesbank, zur entwicklung der realen portfoliorenditen privater haushalte in deutschland, monatsbericht, august 2018. 3 a barbu, c fricke and e moench ( 2017 ), procyclical asset management, reach for yield, and bond risk premia, mimeo. 4 d w diamond and r g rajan ( 2012 ), illiquid banks, financial stability, and interest rate policy, journal of political economy, 120, 552 – 591 ; e farhi and j tirole ( 2012 ), collective moral hazard, maturity mismatch, and systemic bailouts, american economic review, 102, 60 – 93. 5 see also m gertler, n kiyotaki and a queralto ( 2012 ), financial crises, bank risk exposure and government 5 / 6 bis central bankers'speeches financial policy, journal of monetary economics, 59,, 17 – 34, for a macroeconomic model in which the possibility of asset purchases increases banks ’ incentives to take more risk. 6 o issing ( 2003 ), monetary and financial stability – is there a trade - off?, speech at the conference on “ monetary stability, financial stability and the business cycle ", bank for international settlements, basel. 7 k ueda and f valencia ( 2014 ), central bank independence and macro - prudential regulation, economics letters, 125, 327 – 330. 8 b s bernanke ( 2002 ), asset - price “ bubbles ” and monetary policy, remarks before the new york chapter of the national association for business economics, new york. 9 see r arsenault and n owen - smith ( 2008 ), resource partitioning by grass height among grazing ungulates does not follow body size relation, oikos, 117, 1711 – 1717. 10