jens weidmann : the economic situation in germany and the euro area, monetary policy and the longer - term challenges facing the euro area introductory statement by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at a discussion with the association of the foreign press ( vap ), berlin, 23 august 2018. * * * 1 the german economy ladies and gentlemen i am delighted to have this opportunity to exchange my views with you today. allow me to first make a few brief remarks about the economic situation in germany and the euro area, monetary policy and the longer - term challenges facing the euro area before i take your questions. the german economy is flourishing : indeed, it is still enjoying a period of economic boom. economic output is outstripping pre - crisis levels by far. unemployment is at its lowest level since german reunification and employment remains on the up. the upswing is likely to continue. it is broadly based across demand components : consumption, investment and exports are all increasing. it will also benefit from a more expansionary fiscal policy stance, especially next year. however, it is unlikely that economic expansion will maintain the pace seen in 2017. in particular, exports will probably increase at a more moderate rate. at home, the rising shortage of skilled workers looks set to dampen employment growth. this is also the result of high levels of aggregate capacity utilisation. labour market tightness is contributing to higher wage growth and to increasing domestic price pressures. so far, the wage agreements concluded this year have been significantly higher than those concluded last year. but the uncertainty surrounding the outlook for the economy has increased. global economic growth remains buoyant, primarily driven by the two biggest economies in the world – the united states and china. however, political risks have increased, in particular – notably the risk of international trade conflicts intensifying. when tackling the global economic crisis of 2008 – 09, the g20 countries refrained from adopting beggar - thy - neighbour policies, thereby ensuring that they did not repeat the mistakes of the 1930s. back then, protectionist measures played a role in exacerbating the great depression. today, a major trade war could be severely detrimental to the global economy. recently, risks for individual emerging market economies have gained greater prominence. the developments in turkey make it crystal - clear that the best way to stave off crises is to run sound and responsible economic and fiscal policies

by bank of bis central bankers ’ speeches italy staff. in addition to revealing unauthorized share buy - backs by popolare di vicenza, it highlighted a further problem with the funding of the shares issued in recapitalizations : the bank had not deducted from the supervisory capital the funds raised against the substantial loans it had disbursed to subscribers of its shares, as instead required by prudential regulations. already after the initial findings of the inspection the bank had been called on to take corrective measures, including a virtually complete change of management. once the inspection had been completed the bank was ordered to restore capital adequacy buffers to regulatory levels, draw up a new business plan, and strengthen its organization and internal control functions. in accordance with the new business plan, the bank then passed a resolution approving a comprehensive plan to strengthen its capital and radically overhaul its governance, including its transformation into a joint stock company, now completed, a €1. 5 billion capital increase, and stock market listing. in the case of veneto banca, an inspection carried out in 2013 found major anomalies of a technical and administrative nature, highlighting the practice of disbursing loans to customers against purchases of the bank ’ s own shares, which were then not deducted from supervisory capital. we did everything in our power : prohibited the bank from disbursing new loans to corporate executives ; called a meeting of the board of directors to examine the bank ’ s overall situation and pass the appropriate resolutions ; read out to the meeting of shareholders the official request for action to ensure that it was aware of the bank ’ s situation and of the measures taken by the bank of italy ; and imposed fines on the persons responsible. at the same time, where it was not in our power to intervene directly, we used strong moral suasion, calling on the bank to replace all of its management boards and to plan a merger at the earliest opportunity. the bank ’ s response at the time was unsatisfactory. it did not make all the required changes to its governance and continued to engage in conduct contrary to the principles of sound and prudent management, such as granting loans to subscribers of the capital increase made in 2014, which emerged in the course of the follow - up inspection in 2015. because of the consequent reduction of supervisory capital and further rapid deterioration in the quality of assets, the situation could only be remedied through a €1 billion