##bitrarily but should instead reflect demographic trends and productivity gains. this brings me to the all - important question : how can an economy ’ s productivity be maximised? here, i would like to cite another economist who delivered some major input regarding growth theory : i refer to joseph schumpeter, who described the growth process as one of “ creative destruction ” under which an entrepreneur develops a new product or a cheaper method of production which then enables him to steal the market from his competitors. as a result, less productive businesses disappear from the market. overall, this serves to boost economic output. viewed from this perspective, the competitive forces unleashed by innovative enterprises are the engine of growth – and there is ample evidence to support this assessment. for example, as a rule, the prosperity - boosting effects of the european union have not arisen from higher trading volumes, as one might perhaps assume. rather, studies 1 show that the upturn in growth is mainly due to the fact that the expanded single market has intensified competition. and this increase in competition has in turn led to more innovative and therefore more productive enterprises. 3. common market for services this insight leads us directly on to several possible ways of increasing growth potential in germany and europe. the single market has proven extremely successful at simplifying trade in goods. as a result, competition here is intense. enterprises ’ market power does not enable them to charge large mark - ups on top of their costs ; levels are similar to those in the usa, for example. creating a transatlantic market – the ttip is a keyword here – could thus provide even more stimulus in this regard. the usa is the eu ’ s largest export market and its third most important import partner for trade in goods. as far as trade in services is concerned, the two regions share even closer connections. and it is precisely in the area of services that the eu still has some catching up to do in terms of intensifying competition. mark - ups on the cost of services are on average higher than in the usa. one could say that the european commission ’ s services directive has not lived up to expectations. creating a single market for services thus promises considerable economic benefits. the original intention behind the services directive was to anchor in law the “ home country principle ”, which already applies to trade in goods within the eu. this principle states that a service provider shall no longer be hindered by regulations in the importing country if it complies with national regulations

their fiscal autonomy, the sustainability of public finances cannot be safeguarded by rules alone. it is therefore essential that the binding force of the rules is additionally shored up by the disciplining effect of the market. in other words, interest rate levels have to be aligned more strongly again with the risks in government budgets. the only way to achieve that, however, is if the no bail - out clause in the maastricht treaty gains more credibility again. investors have to perceive a more credible threat of losing their money if they buy bonds from governments that have unsound public finances. one proposal put forward by the bundesbank thus envisages changing the contractual terms for sovereign bonds in the euro area by introducing an automatic maturity extension for them as soon as the issuing government applies for an esm programme. up to now it has been the case that a large part of the assistance loans are being used to pay off the original creditors. this means that the original creditors, such as banks, are then let off the hook – at the expense of taxpayers. extending maturities, on the other hand, would leave them on the hook, and they could be still held liable in the event of a later debt restructuring. in an emergency, it can be very difficult to tell for certain whether a debtor is temporarily illiquid or actually insolvent. an automatic extension of maturities, however, would allow the esm significantly more time to give careful consideration to the question of debt sustainability – and without releasing the original creditors from liability during this period. a maturity extension would have the added advantage of substantially reducing the need for financial aid under an esm programme. it would also broaden the range and scope of the existing rescue mechanism. had an automatic maturity extension had been available to us in 2011, for example, portugal would have needed only about €43 billion to cover its entire budget deficit until 2014 rather than the €76 billion in total it received in assistance loans. however, restructuring sovereign debt would be a realistic option only if the financial system could also cope with a haircut. that ’ s because not much would be gained by bringing the financial system to its knees. there would also be an incentive for the community of states to step in for private creditors. for that reason, the close link between banks and sovereigns that exists in the euro area has to be severed. experience of the crisis years has shown that – especially in times of crisis – banks have a big