jens weidmann : reforms for a stable monetary union speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the annual reception of the minister president of the german state of hesse, brussels, 5 june 2018. * * * 1 introductory remarks minister president bouffier thank you for your kind words. i am delighted to see such a large number of guests and would like to greet the representatives of the diplomatic corps, the members of parliament, the representatives of the european commission, the council and other eu institutions, the members of the state government of hesse, and all the other members of our audience today. i have lived and worked in hesse for many years now – in the beautiful rheingau region and in the buzzing metropolis of frankfurt, to be precise – and have long since come to feel at home there. hesse is not only in the middle of germany, it is also at the heart of europe. the political cabaret artist matthias beltz once said : “ the people of hesse are surrounded by masses of germans. they have no access to the sea, the alps or foreign countries, so they have no direct contact with freedom. ” but luckily, freedom comes to us. hesse, and especially the area around frankfurt, has an international character, and the region ’ s cosmopolitan atmosphere makes it an easy and enjoyable place to live. at the same time, hesse is home to several eu institutions. one of these is the european central bank ( ecb ), which turned twenty a few days ago. it commenced its tasks on 1 june 1998 in frankfurt, a few months before the start of the third stage of economic and monetary union. 2 20 years of the euro in the two decades since it was introduced, the euro has proven a success. the original promise of a stable currency has been kept – the euro is stable both internally and externally. at 1. 7 % on average over the last 20 years, the rate of inflation is lower than many people expected. it is therefore no surprise that support for the euro among the general public is high. according to the latest eurobarometer survey, three - quarters ( 74 % ) of respondents in the euro area are in favour of the single currency, while only one in five ( 21 % ) is against ( the idea of ) the euro. in some countries, germany included, the approval rating is higher than 80 %, even. however,

we, the bundesbank, wrote : “ germany has fallen far behind european partner countries in terms of key data such as gdp growth, employment and the government deficit. ” far - reaching reforms were initiated in germany to tackle this period of structural weakness. these included the agenda 2010 reform programme, which was controversial at the time and included the so - called “ hartz iv ” legislation. this was accompanied by a ten - year period of wage moderation running from 1997 to 2007, which addressed the location - related problems that faced key industries and the high level of entrenched unemployment at that time. the situation on the german labour market has improved considerably in the meantime thanks to the reforms that were introduced back then as well as to wage moderation. the number of persons in work has risen by 3 million since 2005 and now stands at an all - time high. the number of registered unemployed has fallen from almost 5 million in 2005 to less than 3 million today. and the average duration of unemployment has receded sharply. germany has gained considerably in competitiveness over the past 10 years, for which reason it is now often seen as a model for reforms in the crisis - hit countries. nevertheless, i do not wish to recommend germany ’ s reform agenda as a “ template ” for other countries to apply directly and uncritically to their own situation. after all, the starting situation differs from one country to the next. tailored, country - specific solutions need to be found for each individual country ’ s problems. and yet, some general recommendations for the crisis - bound countries may certainly be gleaned from germany ’ s experience with reforms. some countries will ask how the unit labour costs that rose excessively in the countries that were later hit by the crisis might be cut – and where this has already happened. how can bis central bankers ’ speeches they avoid repeating past mistakes in the form of excessive wage and salary increases in future? because that is the only way to restore and maintain price competitiveness. what is more, in some countries rigid labour markets are in need of reform. in particular, the disturbingly high level of youth unemployment in the crisis - hit countries shows the urgent necessity of reforms in this area. without reform, young people will be denied the prospects they desperately need after obtaining their school or university qualifications. we must make it easier for them to enter the labour market. the longer it takes them to make the transition from school or university to the labour market, the more difficult