axel a weber : global imbalances – causes and challenges introductory remarks by professor axel a weber, president of the deutsche bundesbank, at the international conference “ 20 years of technical central bank cooperation ”, eltville, hesse, 28 october 2010. * 1. * * introduction ladies and gentlemen i am highly delighted to welcome you to this notable conference at the bundesbank training centre in eltville. central bankers and other officials from 42 countries have gathered here today to discuss various experiences and common challenges. i would like to thank mr thomas gierenstein and mr jurgen sterlepper as well as their team for organising this conference. we are holding it to celebrate 20 years of technical central bank cooperation within the bundesbank. while the bundesbank has always been available to provide foreign central banks with technical assistance, the momentous events of the early 1990s prompted the bank to institutionalise this kind of work. it was, in particular, hans tietmeyer, my pre - predecesssor and vice - president at the time who was quick to grasp the far - reaching importance of those historic events for central banking : the fall of the iron curtain, the collapse of the communist regimes in central and eastern europe, the subsequent transformation in those countries from a planned economy to a market economy as well as the break - up of the soviet union and the resulting formation of new, independent states. many of those states had to start from scratch in establishing their own national central banks. all things considered, there was a major and vital need for central bank cooperation. hence, in the first few years of its existence, the activities of the bundesbank ’ s “ technical central bank cooperation ” were very much focused on the process of restructuring the banking system in those countries. this meant transforming formerly state - owned banks into a two - tier banking system consisting of an independent central bank and profit - oriented commercial banks. later on, activities were concentrated on helping central and east european countries to navigate their way to the european union. seminars at the time were aimed, in particular, at the smooth integration of the accession countries ’ central banks into the european system of central banks. after this phase was successfully concluded with those countries ’ accession to the eu, central bank cooperation widened its scope in terms of its geographical reach and activities. in the era of globalisation, cooperation among central banks has generally become much closer. this is, of course, especially true of cooperation among major central banks.

as a quarter of world trade and produced around a tenth of global gdp. today, those shares have both fallen under 5 %. for details on how the historical estimates are calculated, see ‘ the uk at the heart of a renewed globalisation ’, speech given by mark carney, 24 october 2013, available at http : / / www. bankofengland. co. uk / publications / documents / speeches / 2013 / speech690. pdf. all speeches are available online at www. bankofengland. co. uk / speeches the resulting cost to our citizens has been tremendous. over the past decade, uk average real earnings th have fallen for the first time since the middle of the 19 century. trust in the financial system has plummeted. over the past decade, the uk and its key g20 partners have been fixing these fault lines and creating a system that is safer, simpler and fairer. the system is safer because banks are now much more resilient, with capital requirements for the largest global banks that are ten times higher than before the crisis and a new leverage ratio that guards against risks that may seem low but prove not. the financial system is simpler. as banks have become less complex and more focused, they are lending more to households and businesses and less to each other. a series of measures are eliminating toxic and fragile forms of shadow banking while reinforcing the best of resilient market - based finance. and more durable market infrastructure is simplifying the previously complex – and dangerous – web of exposures in derivative markets. the financial system is fairer because of reforms that are ending the era of “ too big to fail ” banks and addressing the root causes of a torrent of misconduct. the benefits of these painstaking efforts are beginning to be realised. the global financial system is moving from fragility to resilience. the too - big - to - fail public subsidy enjoyed by private systemic banks has fallen by 90 % in the uk. credit is now growing in all major economies. sources of finance are increasingly diversified between banks and markets, helping to keep the cost of finance low. and the system is demonstrating an ability to dampen shocks rather than amplify them. despite this transformation, there are nascent risks that, if left unchecked, could reverse the progress made and ultimately undermine the g20 ’ s objective of strong, stable and balanced growth. indeed, the global financial system is at a fork in the