Fiscal banking authorities are closely monitoring the evolution of the structural risk in the banking industry. One respective indicator is the 'z-score'. By definition, z-score is computed as return on assets plus equity-to-assets ratio divided by the standard deviation of return on assets. Please describe your view on the banking KPIs applied to the compute 'z-score'. Please assess and comment on the development in the chart below, comparing United States and France. Which conclusions would you derive for the underlying reasoning, particularly focusing on capital? What are your recommendations to European Central Bank in respect to the upcoming macroeconomics downturn?

Bank Risk: Z-score 30 Lower risk - France Germany - Italy -United Kingdom United States -Canada Japan 5 Higher risk 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bank capital Tier 1 capital as a percentage of risk-weighted assets 2000 2016 Tier 1 capital as a percentage of total assets 2002 2016 Risk-weighted assets as a percentage of total assets 2002 2016 United States 2008 2008 France 2008 2008 2008 Germany 2004 2004 Italy 2013 2013 United Kingdom Canada Japan 0 5 10 15 20 25 5.0 7.5 10.0 0 20 40 60 80 Bank Risk: Non-Performing Loans As a percentage of total loans Enlarged scale - Italy France Germany United Kingdom United States Canada Japan 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bank profitability: return on assets net profit as a percentage of average assets +2.0 +1.5 France Germany Italy United Kingdom United States Canada Japan - 1.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bank profitability: net interest margin net interest revenue as a percentage of interest-bearing (total earning) assets - France Germany Italy United Kingdom United States Canada Japan 0.5 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bank Risk: Z-score 30 Lower risk - France Germany - Italy -United Kingdom United States -Canada Japan 5 Higher risk 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bank capital Tier 1 capital as a percentage of risk-weighted assets 2000 2016 Tier 1 capital as a percentage of total assets 2002 2016 Risk-weighted assets as a percentage of total assets 2002 2016 United States 2008 2008 France 2008 2008 2008 Germany 2004 2004 Italy 2013 2013 United Kingdom Canada Japan 0 5 10 15 20 25 5.0 7.5 10.0 0 20 40 60 80 Bank Risk: Non-Performing Loans As a percentage of total loans Enlarged scale - Italy France Germany United Kingdom United States Canada Japan 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bank profitability: return on assets net profit as a percentage of average assets +2.0 +1.5 France Germany Italy United Kingdom United States Canada Japan - 1.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Bank profitability: net interest margin net interest revenue as a percentage of interest-bearing (total earning) assets - France Germany Italy United Kingdom United States Canada Japan 0.5 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016