. furthermore, from 2008 on a revised enterprise taxation will be valid. i don ’ t want to keep secret, that there is still some way to go, however. just to mention one or two examples : some 25 % of the new jobs in germany are temporary, whereas only 4 % of the labour force stock is temp - work. this shows the need for further amendments of the labour market flexibility. another example is the german deficit. from my point of view we are right now in a good position to go for a balanced budget and we are still a good way off. concluding remarks let me conclude : a monetary union does not automatically lead to a high decree of competitiveness and good economic performance, but the remove of the “ veil of exchange rate ” puts the finger on the root of the matter, i. e. the structural weaknesses of a country. taking all this together, germany is a classic example of how market - related adjustments can work and be effective under the rules of a monetary union.

the financial sector would serve the real economy and society, not the other way around. i guess many, if not most observers back then would have expected such a task to have been completed seven years later. nevertheless, i stand here today to convince you that we have not yet arrived at that point. rather, we need to continue the reconstruction of the banking sector. we need to finalise reforms with the aim of ensuring a stable banking sector that, at the same time, serves the real economy and achieves sustainable profitability – in that exact order. this remains a broader challenge for society as a whole – one not only for banks, markets and supervisors, but also the general public, academia, and the media. the financial crisis and the subsequent recession revealed to us why this is such an overwhelming challenge : the financial system, and banks in particular, provide an essential bis central bankers ’ speeches infrastructure function for modern economies. their stable functioning is a public good. the negative externalities of actions taken by bankers and their banking institutions have profound repercussions for the entire system. in my speech today, i will outline why work on this infrastructure is still in progress : if you think of the financial system as streets and bridges, the regulatory reforms around the basel iii package have led to some repairs, some renovations, and some closures. the infrastructure has become safer, but there are still several potholes and too many possibilities of a localised collapse in the system. at present, we are still in the process of finalising these reforms, of completing the reconstruction work that is very much needed. 3. lessons learned, realities accepted but first, let me restate three truths that had to be learned the hard way during the crisis. and let me borrow the support of one of the leading academic figures in financial market research. about four months ago in this very room, nobel laureate robert shiller presented the third edition of his book “ irrational exuberance ”, earlier editions of which had already pointed to the misguided policies of financial re - regulation in advance of the crisis long before policymakers, markets, and the general public even became aware of them. 1 his simple message this time was that irrational exuberance is still a defining feature of how financial markets function. investors still follow cycles of mania and crashes, rather than rationally calculating the probabilities of all relevant scenarios – and rather than considering the negative externalities of their transactions. full stop. this confirms the three