2 / 4 / 2020 change and continuity | deutsche bundesbank change and continuity speech delivered at deutsche borse ’ s new year ’ s reception 03. 02. 2020 | eschborn | jens weidmann 1 introduction 2 monetary policy strategy 2. 1 communication 2. 2 deﬁnition of the monetary policy aim 2. 3 measuring inﬂation 2. 4 instruments of monetary policy 2. 5 additional aspects 3 conclusion 1 introduction dear joachim faber, dear theodor weimer, chere christine, ladies and gentlemen, there ’ s a saying that twice is repetition and three times is a tradition. so it is a pleasure, and a privilege, to speak to you here today in what it is my third speech at deutsche borse ’ s new year ’ s reception. for me, this event is one of the highlights at the beginning of the new year, not least because of the impressive setting. and it is no less gratifying to see all these familiar faces once again. https : / / www. bundesbank. de / en / press / speeches / change - and - continuity - 824754 1 / 11 2 / 4 / 2020 change and continuity | deutsche bundesbank but discovering unfamiliar faces can be fascinating as well. you will have a great opportunity to do just that if you happen to come here again over the next few days. you see, when deutsche borse is not holding its new year ’ s reception in this hall, it is exhibiting photographs from its own art collection here. some of these pictures can be found up here on the gallery, including photos from a series taken by christian borchert. he took portraits of families at home, usually in their living rooms. years later, he came back to photograph them again. his images show how people change, yet stay the same. things get particularly fascinating when you consider how much these families'circumstances changed. the ﬁrst pictures date back to the gdr era ; the last were taken in post - reuniﬁcation germany. the shifting sands of time put us to the test, over and over again. that goes for politicians and entrepreneurs, and for central bankers, too. we heard from joachim faber just now how change is impacting on deutsche borse ’ s strategy. i would like to add my own thoughts on the strategy for monetary policy. 2 monetary policy strategy people looking to realise their full economic potential need a stable currency. that is something merchants already knew back in the middle

admit to being a fan and proponent of diversity in terms of bank size and business model, as this makes our banking system more stable. supervisors are not supposed to be making structural policy ; rather, they ought to be actively working towards proportionality in regulation. this is precisely why banking regulation and banking supervision are already designed with a large degree of proportionality. however, the ambitious reforms following the financial crisis have made the rulebook more complex, particularly because the rules were oriented to the epicentre of the financial crisis : large and medium - sized institutions with risky business models. 1 this new regime has made compliance a much more difficult and time - consuming affair. this overhead is high for each and every institution - regardless of its size. however, small banks and savings banks, owing to their smaller staff sizes, are far less able to spread the costs of compliance across their employees and have to either hire additional staff or enlist external aid. this leads to comparatively higher burdens. for that reason - and because smaller institutions pose less of a threat to financial stability than medium - sized to large institutions - i think that offering relief to small banks and savings banks is the right thing to do. one thing that is of paramount importance to me, however, is this : any relief measures being discussed here have to solve the actual problem - which is not, first and foremost, the minimum capital requirements, but primarily the operational burdens imposed by the need to comply with complex rules. what this means specifically is that any relief for smaller banks and savings banks must be about removing operational burdens - and of this i am firmly convinced. on the other hand, there cannot and must not be any easing of capital and liquidity requirements. 2 / 4 bis central bankers'speeches moreover, no relief should be permitted to jeopardise financial stability. medium - sized, highly systemically interconnected institutions - those referred to as " too interconnected to fail " - and those institutions with risky business models should not be provided any relief. the recent financial crisis, during which many insolvent institutions had to be bailed out, is still fresh in all of our minds. we also need to be careful not to create any loopholes that end up being used by so many small institutions that a situation of general distress results. i am therefore firmly convinced that institutions need to be regulated with a sense of proportionality without diluting the new regulatory regime. i am committed to ensuring that the debate on greater proportionality is