 Good morning everybody. Good morning ladies and gentlemen First of all my heartfelt thanks to the European Central Bank for having us here. It is a great opportunity to Also explain some of the politics behind this initiative, and I will also address three Issues what are the EU priorities for Esther? What are the priorities for you ribor, and what are the accompanying measures that the public sector in terms of encouragement in terms of Authorizations and in terms of legislation What the public sector can provide in this area so as opposed to the previous speakers I will talk a bit about the politics of the process and what's happening Around the process in order to ensure the smooth transition Because what we are really here for and why the European Commission is a member of the RFR working group or an observer rather is that we are absolutely Convinced that the transition from a existing benchmark Which is a critical benchmark and which has been designated as a critical benchmark by the European Commission To a fallback rate or to a risk-free rate is as smooth as possible That is our absolute priority, and that is why we are an observer in this group And I think it's important that the European Commission doesn't just legislate and makes proposals And then these are dispatched by Parliament and Council, and then it's out there And then we wash our hands in innocence because we've done our job. That's not how we work If we legislate and if there are issues subsequent to this legislation We are involved as the initiator of legislation to accompany this process and to make sure that any Consequence that arises from this legislation in practical implementation is sorted out. We accompany this as a initiator of policy and also as an initiator of follow-on Legislative action which may prove necessary in order to remedy some of the effects And this is why the European Commission is a member of this Sorry, I always say member. We're actually only an observer So we are an observer of this working group Seamless transition can be achieved in many ways. I think our priority is that the Esther risk-free replacement rate is published as soon as possible To facilitate the maximum take-up in the derivatives market But we're also aware that a take-up in a derivatives market implies complex Technological operations you just don't put a rate out there and tell all the counterparties please from henceforth use that rate There are adaptations to be made adaptations on the Contra party side adaptations on the clearing side So we are entirely cognizant that there might be an adaptation period which is necessary and that adaptation period Requires accompanying measures that the Aeonia does not disappear overnight The Aeonia is not the future. We want to say that very clearly Esther is the future rate But there must be a smooth transition which possibly entails that these two rates coexist for a reasonable period of time until Contracts move on to Esther and we have several ways of ensuring this transition one of them legislative But they're also non-legislative means ie there might be scope for Transitional approvals for benchmarks which are not there forever, but which might be required for an interim period There's a lot of arsenals in the existing benchmark regulation Which allow you to have transitional approvals to have interim approvals and we might have to also trigger those if Legislative measures either do not fully solve the problem or may not come to fruition due to time constraints in the legislative Calendar and I will speak to that at the end. So this is our main policy for Esther There must be the smoothest possible transition Esther is ultimately the future rate but there must be accompanying measures to ensure the transition and we Should keep a maximum of opportunities a maximum of alternatives in our toolkit We should not just bet on one way of ensuring this transition There must be several ways and several alternative ways of ensuring this transition Coming to your I bor We are of course cognizant that your I bor is a huge issue Not just for the financial markets, but also for retail consumer credit mortgages This is really about the citizens This is the citizens need to have safety to have certainty that this rate will prevail and we have encouraging developments that a Hybrid you're I bor could possibly be the subject matter of an authorization request and Possibly keeping our fingers crossed be the subject matter of an approval and all of this within the deadlines of the benchmark regulation Hence prior to the 1st of January 2020 That's our preferred option no doubt about it I want to be very clear an approved you're I bor prior to 2020 Prior to the 1st of January 2020 is absolutely our preferred option everything else is second best So we do hope that there are good prospects for this approval And we will do everything possible from our side to accompany such an approval process Because of the crucial importance that you're I bor has for the retail sector for the mortgage sector And there needs to be continuity and we don't want the benchmark regulation to be the trigger of this continuity in this essential rate Don't try to read the slides. I'm not fully following the slide. So don't get distracted by the slides Those were just for the for the record for the for the book for afterwards So check against delivery Now legislation Sorry one more word about your I bor We do think that a rate which is not based on MMSR data, of course is crucially dependent on contributor banks So we are doing everything possible to convince contributor banks that they maintain this essential rate and I do think That we should have a fallback to your I bor and I do think that the work on developing a term rate on the basis of ester Should be fostered, but the best is still that you're I bor and the panel banks continue to supply this And that's the great difference between live or in the United Kingdom the FCA might be more relaxed about the survival of Live or because live or doesn't play that role in the mortgage market. So the European Union must be More concerned about the survival of your I bor then maybe the UK authorities are about the survival of live or Simply before there is this huge retail exposure So we are cognizant of our duty vis-a-vis our citizens that we are more engaged in trying to save your I bor Then maybe our counterparts are in trying to save Live or that's also I think a very clear message and then finally to the legislative program As I said to ensure the smooth transition Especially in the eonia to ester scenario if we get your I bor approved there wouldn't be a transitional issue There is of course also the legislative agenda We have asked for a transitional period extension Which means that in an additional two-year period not just legacy contracts can refer to the Eonia rate, but also new contracts if it is not possible to immediately switch to ester could for a Transitional period still use the Eonia until that switch is complete. We know that there is an issue of mixed incentives here Absolutely as longer as long as you still have Eonia as a fallback You may not be as quick to transfer your contracts to ester But if Eonia is a fixed spread it shouldn't make a big difference and it shouldn't be a great disincentive to switch But we will much carefully that we will not create with legislative interventions a disincentive to slow down and otherwise rather swift shift to ester we have proposed this due to operational issues if Eonia gets an approval or a transitional approval to be published as a tracker rate We would be very happy It's a fallback legislation is a fallback if there is any way to give a transitional approval to Eonia as a fallback While we are transitioning to ester. That's a really good option. We would not be against it We have however because we have a safety net a duty to also introduce in legislation So we have introduced this extra transitional period for non-authorized Eonia in the so-called ESA review and as the ESA review Has a lot of other elements and a lot of other debate. We have now chosen a second vehicle, which is the low-carbon benchmarks Maybe some of you have heard that we have made a proposal and low-carbon benchmarks in itself That's not very controversial and we have also introduced the amendment in the council into the proposal on the low-carbon benchmarks Likewise the European Parliament has also introduced the amendments on the transitional period into the low-carbon benchmark proposal So we have two parallel Legal vehicles out there which have this transitional period as part of their amendments Will any of those two make it through the legislative process between now and when the Parliament breaks for elections? That's the great unknown that even the European Commission can't guarantee Which one will be the better one? We don't know. That's why we chose both safety net approach yet again dual track We see a lot of dual tracks here yet again. We have to do all track Hopefully one of them will make it and the issue is resolved But if none of them makes it because simply the legislative calendar doesn't permit We are actively engaged in the fallback solutions on how to keep a parallel track between ESA and a Reformed Eonia in this transition. It must be time-limited but maybe there are Many many other possibilities which creative people can think about to maintain a parallel Eonia Until we have full certainty that operationally the asus which is possible. So this is what the working group is thinking about There's a lot of work going on. It looks much better to conclude It looks much better at the moment than it looked when we started this working group I think that's fair to say when we started this working group The Brits had already done their thing the Americans were doing their thing and we were sitting there saying oh my god Maybe we have to actually also do something and we were very late off the starting blocks here And I think we've gained a lot of time because a lot of people are super engaged about this and a lot of people really take This seriously so we've made up for lost time. We've been able to learn from some of the other Examples that we have out there. We are rapidly catching up We're rapidly closing the gap and possibly we will be in a very good position on the 1st of January 2020 either through accompanying measures Creativity or possibly legislation But I would like to thank on behalf of the European Commission all the participants in the various working groups in the risk-free groups for their unusually high level of engagement for their we are talking about financial services for their Legislative creativity and you're very creative when it comes to issuing new financial products and we can hardly follow what you're doing But you've also shown a significant amount of legislative creativity We have already three versions of the term extension in the European Parliament Everything a bit of a nuance different. Hopefully in the trial log will get them together and agree on one of those three or a compromise between those three You have been very creative. We appreciate that a lot That's democracy and I think possibly by the 1st of January 2020. We will be in a much better place. Thank you very much