as combatting climate change, securing external borders and developing common communications, energy and transport networks can probably be handled more efficiently at the european than at the national level. but in my view, further integration depends crucially on the order in which the steps towards it are taken. it makes sense to begin by agreeing on what policies should be formulated jointly. only then should we address the issue of joint financing. conversely, however, in the interests of efficiency, thought also has to be given to what areas under eu responsibility might be better dealt with by the individual member states themselves. after all, the principle of subsidiarity, which remains the guiding principle of the eu, states that responsibilities should only be transferred from the local, regional or national level to the eu if they can be carried out more efficiently there. if tasks are tackled jointly, then it stands to reason that they should be financed jointly as well. and if the joint financing of these tasks is based on each member country ’ s ability to pay, this can also act as something of a stabiliser in the event of what are referred to as asymmetric shocks. on the other hand, i consider a dedicated stabilisation facility tasked with cushioning asymmetric shocks to be unnecessary and inexpedient. under the present institutional architecture of the euro area, a member country with sound public finances can use fiscal mechanisms to take effective measures against downturns or crises, without breaching the fiscal rules or having to resort to outside assistance. and according to the advocates of such a stabilisation facility, countries with unsound public finances should not be permitted to avail themselves of it in any case. and if a crisis threatens to overwhelm a member state financially, it can always turn to the esm. the esm, of course, only grants assistance if conditions are met that are intended to eliminate the country ’ s economic problems. in my view, we need to stick to this practice, since esm assistance means that extensive risks are communitised. for the very good reason that it is difficult to distinguish in practice between country - specific shocks and structural problems, there is always a danger that such a stabilisation facility may ultimately lead to permanent transfer payments. 6 the bundesbank ’ s balance sheet and profit for the year ladies and gentlemen, the question surrounding the road ahead for monetary union is of great 6 / 8 bis central bankers'speeches significance to the work of the bundes

jens weidmann : opening statement at the 2018 press conference on the annual accounts opening statement by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the 2018 press conference on the annual accounts, frankfurt am main, 27 february 2018. * * * 1 introduction ladies and gentlemen welcome to our press conference to present our annual accounts. before i discuss the most important points of our annual accounts with you, i would like – as is my custom – to say a few words about economic developments and monetary policy. i will also talk about the institutional architecture of the monetary union, which is the backdrop to monetary policy in the euro area. as you know, the debate on developing the monetary union gained a lot of traction last year as a result of the proposals put forward by emmanuel macron and the european commission. following my introductory words, mr thiele will discuss in greater detail selected aspects of our annual financial statement. after that, we will, as always, be happy to answer your questions. 2 review of 2017 as you know, 2017 was the year of the german g20 presidency. we managed to put important issues, such as the impact of digitalisation on the financial sector as well as cyber risks, on the international agenda. finance ministers and central bank governors are now aware that cyber risks pose a potential systemic risk. the wannacry attack that took place in the summer of 2017 drove home the fact that supervisory authorities need to keep a very close eye on this subject. in addition, we were able to finalise the basel iii negotiations last year. that was another step towards a safer banking system. it also gives banks planning certainty, as they can now gauge what capital requirements their credit and investment decisions, for instance, involve. in macroprudential supervision, german legislators created new macroprudential instruments for the residential property market last year. this, too, was an important contribution towards greater financial stability, as it established the legal basis for supervisors to step in to prevent overly lax lending standards for loans for house purchase should financial stability risks emanate from the residential real estate market. another important issue for us last year was, of course, brexit. this was particularly true of our banking supervisors, who are working closely with bafin and the ecb to ensure a smooth transition for the financial industry. in particular, that means providing information and being available to answer questions from banks that