mr tietmeyer talks about systemic risk and lender of last resort facilities speech by the president of the deutsche bundesbank, prof hans tietmeyer, at the conference entitled “ systemic risk and lender of last resort facilities ” organised by the center for financial studies in frankfurt on 11 june 1999. i thank you very much for the invitation to speak to this distinguished audience. as a financial center, frankfurt has to be more than a center of commercial and central banking. undoubtedly, it also needs to be a center of critical scientific analysis. therefore, i appreciate very much the contribution which the center for financial studies is making to the intellectual capabilities of frankfurt. ii the subject of this conference “ systemic risk and lender of last resort facilities ” is likewise both important and tricky. there is no doubt about the fact that recent events have placed questions about the soundness of global financing on the intellectual and political agenda. on the one hand, we have experienced severe financial crises in different regions over the past few years. in terms of their impact, the speed with which the events occurred and the ensuing contagion effects, the crises revealed a new dimension. on the other hand, new games and players have entered global financial markets ; for example, highly leveraged activities and institutions. we have learned, in one case in particular, that such institutions can cause serious troubles if their working assumptions on the future development of market prices fail. so, besides all the old or new - fashioned macroeconomic questions, the discussion on the soundness of appropriate financial and supervisory structures is an important one. and the consideration of systemic risk is part of that discussion. however, we should be careful when using the label “ systemic risk ”. firstly, not every financial crisis of a country or an institution necessarily causes a systemic risk. that does not mean that the international community should or could neglect such crisis. but in order to assess which measures are appropriate, the nature of the crisis has to be clear. and secondly, systemic risk is not a given quantity. to a large extent, it is an endogenous variable which depends on the structures of the financial market, on the supervisory framework at the national and international levels and on the decisions taken by the political and monetary authorities. therefore the topic of systemic risk has a lot of different aspects. the aspect on which this conference focuses, namely the lender of last resort, is certainly not the most prominent point. the first and most fundamental question in that context is how

alan greenspan : china testimony of mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the committee on finance, us senate, washington dc, 23 june 2005. * * * mr. chairman and members of the committee, i am pleased to be here today to offer my views on china ’ s trade and exchange rate regime. i would emphasize that the views i will express are my own and do not necessarily represent those of the federal reserve board. some observers mistakenly believe that a marked increase in the exchange value of the chinese renminbi ( rmb ) relative to the u. s. dollar would significantly increase manufacturing activity and jobs in the united states. i am aware of no credible evidence that supports such a conclusion. the enhanced integration of china into the world trading system is having a notable effect on asia ’ s trade with the rest of the world and on trade within asia. after having risen rapidly through the 1990s, u. s. imports from asia excluding china have flattened since 2000. this has occurred as production within asia has evolved, with the final stages of assembly and exporting to the united states and elsewhere becoming increasingly concentrated in china. as a consequence, because exports by country are recorded on a gross basis rather than as value added, the widening of the united states ’ bilateral trade deficit with china, measured gross, has largely been in lieu of wider deficits with other asian economies, including japan. measured by value added, our bilateral deficits with china would have been far less, and our bilateral deficits with other asian exporters would have been far more. accordingly, an increase in the exchange rate of the rmb, relative to the dollar, would likely redirect trade within asia, reversing to some extent the patterns that have emerged during the past half decade. however, a revaluation of the rmb would have limited consequences for overall u. s. imports as well as for u. s. exports that compete with chinese products in third markets. such a revaluation would affect chinese value added but not the dollar cost of intermediate goods imported into china from the rest of asia, which represents a significant share of the gross value of chinese exports to the united states and elsewhere. ( to the extent that exporters to china revalued as well, of course, the impact on overall asian exports would be somewhat greater. ) the broad tariff on chinese goods that has recently been proposed, should it be implemented