joachim wuermeling : presentation of the deutsche bundesbank's annual accounts 2022 speech by prof joachim wuermeling, member of the executive board of the deutsche bundesbank, at the press conference presenting the annual report 2022, frankfurt am main, 1 march 2023. * * * accompanying slides in german of the speech president nagel, ladies and gentlemen, i would now like to take this opportunity to provide a few more details on the bundesbank's annual accounts for 2022. all the figures can also be found in the annual report, copies of which are provided. and as ever, we will be happy to field any other questions you may have after our remarks today. with that in mind, i would like to focus my attention on a small number of standout points in our annual accounts. 1 balance sheet first, a look at the bundesbank's 2022 balance sheet ( slide 13 ) : in a reflection of the bank's monetary and foreign exchange policy operations, total assets did not grow any further in 2022, but declined instead by just over €108 billion. that leaves total assets at around €2, 904 billion, 4 % down on the record level of €3, 011 billion recorded in the previous year. however, looking at longer - term developments over the past three years, the bundesbank's total assets are currently still up by €1. 1 trillion, or just over 60 %, compared with the end of 2019 – that is, compared with their pre - pandemic level. main reason for the current decline in total assets on the assets side of the balance sheet : lending related to monetary policy operations, which declined by €184 billion primarily due to the repayment of the tltro iii longer - term refinancing operations, which had particularly favourable interest rates for credit institutions during the pandemic. by contrast, euro - denominated securities under the monetary policy purchase programmes grew again, by €45 billion, particularly on account of the pspp and pepp government bond purchases in the first half of the year. another factor driving balance sheet growth in the two previous years was liquidity inflows from other european countries. in 2022, growth in the target2 claim on the ecb came almost to a standstill. the increase amounts to €8 billion, and the claim as at the reporting date came to a total of €1,

strengthening dealers ’ internal systems and controls to better manage potential conflicts of interest. of course, similar challenges exist with market - making in other ficc markets. many firms have taken up these challenges with their own reforms, and their efforts serve to emphasize how complicated these issues can be. dealers must communicate with other firms, within their own firms and with their clients, and must execute their clients ’ trades. the challenge is to identify and preserve the legitimate benefits of such communication and trading while safeguarding against improper uses of information. it may be that these challenges can be addressed through coordinated private efforts ; for example, through such bodies as the foreign exchange committee and the treasury market practices group, sponsored by the federal reserve bank of new york. these groups are actively working on industry best practices in their markets and have often played a constructive role on market practices that enhance market functioning. it may also be that further supervisory or regulatory action is needed. turning to our work on interest rate benchmark reform, it is worth recalling that, before the scandal broke, the london interbank offered rate ( libor ) was not regulated. u. k. authorities have now addressed this shortcoming by making both the submission and administration of libor regulated activities. the process by which firms make their libor submissions is now subject to careful monitoring. the new libor administrator, ice benchmark administration, now regulated by the financial conduct authority, is evaluating changes to libor so that it can be based as much as possible on actual arm ’ s - length transactions from a broader base of funding transactions. with surveillance and penalties in place, and a new administrator, one might be excused for thinking that there is nothing more to be done. in fact, some people do think that. that is emphatically not the view of the fsb official sector steering group that i now co - chair with martin, which concluded that it is essential to develop one or more risk free ( or near risk free ) alternatives to libor for use in financial contracts such as interest rate derivatives. the reasons are related to the structure of both libor and the market that underlies it. unsecured interbank borrowing has been in a secular decline for some time, and there is a scarcity, or outright absence in longer tenors, of actual transactions that banks can use to estimate their daily submission to libor or that can be used by others to verify those submissions. libor is huge – there are roughly $ 300 trillion in gross notion