basel rules in its own jurisdiction. the second qualification is that basel standards are intended for, and tailored to, large, complex, and internationally active financial institutions. as a result, the rules themselves have become large and extremely complex, and basel iii is certainly no exception here. appropriate as they are for global players, the rules tend to overburden small institutions. to demonstrate, let me refer to the german banking landscape, because it is a case in point. in germany there are roughly 1, 700 credit institutions, several of which are “ big players ” and many are small institutions. some have a balance sheet worth no more than a few hundred million euros. some institutions have only a handful of employees. these small institutions are of course having a hard time with rules that are aimed at large and complex banks. the main problem is the compliance workload – that is, the work involved in meeting the requirements and demonstrating that they ’ ve been met. this is to say that the rules could act as an additional handicap for small banks that are already under pressure from many sides. take the rapid digitalisation of banking, for example, or the lowinterest - rate environment in europe. one reaction that we are seeing in the european banking sector is continued consolidation. as supervisors, it cannot be in our interest to overburden smaller institutions with rules that were designed for their larger peers. this would effectively give an advantage to larger financial institutions and intensify the pressure to consolidate. the argument becomes even stronger as some requirements developed for large international banks have proved ineffective for small credit institutions, simply because these enterprises are less complex, are not active in comparable business fields and are thus exposed to fewer risks. during the crisis years, small institutions proved to be more robust – not least due to their simple 2 / 4 bis central bankers'speeches and less risky business models. this is why jurisdictions are free to apply a different set of rules to smaller banks which operate solely within their national market and pose no threat to international financial stability. most countries – including brazil – already have less restrictive rules in place for smaller banks in order to ease the operational burden on them. and i am a strong proponent of extending this proportionality further. in europe, we are currently busy fine - tuning our regulatory framework by providing some additional relief for small, low - risk institutions. importantly, capital and liquidity requirements will remain untouched. but we are aiming to reduce disclosure requirements, simplify reporting, and exempt some institutions

of these dynamics may well feed into the risk landscape. there are numerous consequences that are worth pondering from a stability perspective – think, for instance, of the threat of a rapid disruption of business models, or systemic operational risks. now i am well aware that the whole digitalisation trend has produced a host of buzzwords and metaphysical theories, some of which might never materialise. no major disruption has occurred to date. if you look at the german banking sector, there are segments such as internet payments where new market entrants have taken incumbent banks by surprise. but these developments have had limited effects outside of those segments. also, while new market entrants initially took 3 / 4 bis central bankers'speeches an aggressive approach towards incumbents, different forms of cooperation are usual today – we observe a blend of competition and cooperation as well as a widening of services. an abundance of new business ideas have turned up, from white label banking to digital ecosystem strategies. so, as a preliminary summary of digitalisation, i can say that, as of today, digital revolution fantasies have waned. what is more, if we look at regulation, earlier narratives about the end of banks have ceased. not long ago, the so - called fintechs were presented as opponents to classical banks. today, some fintechs have even acquired a banking licence, meaning that they have to fulfil exactly the same requirements as other, age - old institutions. but have we seen all that digitalisation has to offer? not at all, if you ask me. at the present point in time, the transformation is only gaining momentum. from other sectors of the economy, we have learned time and again how digitalisation has transformed business. in the music industry, where selling individual pieces of music on demand online seemed like the end of the narrative of cut - throat competition, music streaming services suddenly appeared and quickly gained market shares. in banking, business changes and changes in customer habits are likely to reinforce each other. we simply cannot predict where this will lead us. but regarding regulation, i guess it ’ s fair to say that we have already learned a valuable lesson. if we want to find good regulation for a digital financial world, we cannot build it on superficial distinctions : we have to look closely at each and every case. be it crypto currencies, robo advice or payment services – whether it constitutes a risky financial business or merely an additional service may depend on details. when advancing regulation,