sabine mauderer : green transition in germany – short - term needs and long - term opportunities speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the kfw " capital markets conference on energy transition for germany ", frankfurt am main, 9 july 2024. * * * check against delivery 1 introductory remarks ladies and gentlemen, last friday, we found out that germany is not going to be the next european football champion. unfortunately. but what i can tell you today is that – fortunately – germany is the european champion when it comes to registered patents. and it is competing at the top level globally, too. as you know, germany has been through challenging times in recent years : 2020 marked the beginning of the global covid - 19 pandemic that triggered a severe supply shock. in early 2022, war broke out in europe, causing, first and foremost, immense human suffering in ukraine, but also economic disruption across the continent. at that time, it also became painfully clear how dependent germany had become on importing fossil fuels. this also translated into higher prices. in october 2022, inflation in the euro area reached an all - time high of 10. 6 %. 2 situation today so, let's have a look at the situation today. we overcame the pandemic, thanks in part to a vaccine developed in germany. and as for the economic fallout, luckily only a small percentage of companies went bust. this year, the economy has started to pick up again. the eurosystem managed to bring inflation in june down to 2. 5 %, less than two years after inflation peaked. representatives from twenty different european countries worked together to set monetary policy in a way that brought euro area inflation back towards its 2 % target. this shows that europe works! i expect the same dedication to complete the capital markets union. at the same time, the labour market has been robust. according to eurostat, the unemployment rate in may is stable at 6. 4 % in the euro area, and just 3. 3 % in germany. 1 german businesses are well aware that international recruitment is needed to manage the demographic challenges. numerous ceos have made that very clear. 1 / 3 bis - central bankers'speeches our political system in germany is an anchor of stability. these days, we all know how important that is, also from an investor's point of view. furthermore, germany's fiscal situation is sound

. however, the forecasts should be interpreted in caution, which is a problem that i have already touched upon. first, tensions in energy markets could persist for longer than assumed in the forecasts. second, the still high commodity prices could be passed on to consumers to a greater extent. and third, wages could rise more strongly than expected, partly in response to inflation surprises. 3 monetary policy in view of these price developments and the outlook for inflation, the ecb governing council has acted decisively. it has taken the first steps towards normalising monetary policy. in july, we set the interest rate reversal in motion. we raised key interest rates by 0. 5 percentage point and brought the chapter of negative deposit rates to a close. in september and october, we followed this up with even larger interest rate hikes of 0. 75 percentage point. further interest rate increases are necessary to bring the inflation rate back to 2 %. the size of each interest rate step and how high we will raise the rates will depend on how the data and outlook develop. however, monetary policy normalisation is about more than just raising key interest rates. the ecb governing council will also look at the large holdings of bonds. these currently stand at almost €5 trillion. and they continue to push euro area bond yields down significantly. all of these monetary policy measures are able to curb inflation – not immediately, but with a lag. in any case, as the governing council of the ecb, we must ensure that the high rates of inflation come to a swift end. ultimately, there is no question that the longer inflation remains high, the higher the risk that longer - term inflation expectations will rise. it would then be all the more difficult for monetary policy to restore price stability. and this would increase the risk of inflation becoming entrenched at a high level over the medium term. the eurosystem has a mandate to maintain price stability. i will therefore continue to do all i can to ensure that we, as the ecb governing council, do not – under any circumstances – let up too soon, that we press ahead with monetary policy normalisation with determination – even if our measures dampen economic growth. because in a situation where monetary policy lags behind the curve, the macroeconomic costs would be significantly higher. 4 banks in germany ladies and gentlemen, what must be going through your mind right now when you, as representatives of banks, hear about the determination to resolutely normalise