have to bring three objectives of the basel reform package into alignment. first, we wish to reduce excessive fluctuations in the calculation of risk - weighted assets by internal models ; second, we wish to hold onto risk sensitivity ; and third, the new rules must not lead to any significant increase in the currently applicable overall capital requirements. 1 / 4 bis central bankers'speeches from today ’ s perspective, i think these three objectives could well be at risk. felix hufeld expressed a similar opinion. this is because provisional impact assessment studies point to a significant increase in overall capital requirements. there is, therefore, definitely some latitude for lowering requirements. we have pledged to use this latitude. and we should use it in such a way that it will serve the goals i have just mentioned. from a german perspective, there are two essential areas of action for the negotiations at the end of november. first, preservation of internal credit risk models, and therefore of a risk - sensitive approach – even at the cost of constraints resulting from input floors ; and second, not introducing an output floor. 2. is the regulatory framework appropriate from a risk perspective? the case of real estate loans let me explain the first point by taking the example of real estate loans – a topic that is particularly dear to us in germany. real estate loans are an important business area – worldwide. even a high level of property collateral cannot rule out losses in the credit business. to what extent should banks therefore be allowed to claim collateral as being risk - mitigating when calculating their regulatory capital? a typical approach is to take the market price of the collateral. but market prices are, of course, prone to overvaluations and price bubbles. the regulatory framework should take such risks into account. in basel, there is a clear consensus on this matter. in some countries, such as germany, additional risk - mitigating rules are in place. for example, banks and savings banks are obliged to apply conservative value calculations when valuing real estate. these are more cautious and less volatile than valuations based on the market value. they have led to very low loss rates for as long as they have been in place. in other countries in europe and the rest of the world, less restrictive valuation standards are often used. the basel committee would now like to see all valuation methods being treated equally. we, as the german supervisory authority, will be objecting to this proposal in the basel negotiations, as this would distort global and regional competition.

andreas dombret : " the new normal " in banking - perspectives for regulators speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the bundesbank reception as part of eurofinance week 2016, frankfurt am main, 15 november 2016. * * * 1. " the new normal ” in banking – orientation through regulation? ms daniele nouy vice - president sabine lautenschlager ladies and gentlemen the “ new normal ” is the big topic of this year ’ s euro finance week here in frankfurt. to me, the term “ new normal ” carries negative undertones. it reminds us that many aspects of banking business – from the relationship between a bank and its customers, via political risks, to sources of income – have changed, all at the same time – and for good. this can certainly engender frustration and fear. still, i don ’ t believe that change and uncertainty, in themselves, are necessarily a cause for complaint. after all, they are the foundations of economic activity in general, and of banking business in particular. but, as so often in life, it is a matter of degree. what many people undoubtedly want from banking business ’ s new normal is an adequate amount of orientation. banks and savings institutions want orientation for regulation, as well. all eyes are now on basel iii. two essential questions arise today : what is the current status of the reforms? and what can we regulators do to provide banks with suitable orientation for the “ guide rails ” of banking business? allow me to make a preliminary remark. in my opinion, there is no such glaring conflict between banks and regulators about the need for a planning horizon. the basel committee central bank governors have specified the timeframe in good time and stipulated that capital requirements should not increase significantly overall. such a voluntary commitment surely did not and does not make the committee ’ s job any easier. but it gives the institutions some orientation and helps them to establish a planning horizon. financial institutions receive clear guidelines through a globally harmonised regulatory framework which sets incentives for careful bank management while being, at the same time, as simple as possible. for me, that is the essential principle of the forthcoming basel reforms. where do we stand today? the basel committee ’ s all - important meeting in santiago is just over two weeks away, and i think we ’ ve already made good progress ; but that certainly doesn ’ t mean we ’ ve reached our destination. we still