adaptation that is key for their long - term viability. so i would argue that regulators should be mindful of the burden they are placing on banks and the potential unintended consequences. if banks are to adapt effectively to the new regulatory environment, they also need clarity on what it will look like. the risk of a prolonged period of regulatory reform – and remember the current phase has been ongoing since 2009 – is that it creates a moving target, which in turn prevents the industry from settling into sustainable new business models. to give just one example, some banks responded to the crisis by switching to a vision of retail deposit - funded subsidiaries, which was also supported by the initial wave of regulation, for example the net stable funding ratio. now, with the introduction of the total loss absorbing capital rules, they may be forced to reconsider those business models as they will need to issue more unsecured long - term debt. let me be clear : i am not making a value judgement about these regulations. what i am saying is that, if we want banks to adapt successfully to the post - crisis world, we need to give them sufficient visibility about the future. finally, regulation needs to be mutually consistent. in particular, if we want banks to be bigger players in a more market - based financing mix, we need to ensure that regulation supports that transition and does not unduly impact banks ’ ability to transact in capital markets. we know that one side effect of the reform agenda so far has been banks retreating from, or scaling down, certain market making activities. see for example buch, c., and esteben, p. ( 2014 ), “ do better capitalized banks lend less? long - run panel evidence from germany ”, international finance 17 : 1. harle, p., luders, e., pepanides, t., pfetsch, s., poppensieker, t. and stegemann, u. ( 2010 ), “ basel iii and european banking : its impact, how banks might respond, and the challenges of implementation ”, mckinsey working papers on risk, number 26. bis central bankers ’ speeches this is a particular issue for less liquid markets, such as abs, which depend on market makers that can absorb temporary supply - demand imbalances. it is also one reason why part of the cmu action plan is a call for evidence on the cumulative impact of financial services reforms. going

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