##bank now declines to accept coins in bags, as it is not costeffective to do so. accepting them would make life easier for some of the bank ’ s customers. but the executive board has decided on a “ wholesaler ” business model for cash processing, and so the bank now only accepts standard coin containers. despite our best efforts to innovate and find new solutions, we will all increasingly feel the squeeze, faced with limited funds and growing expectations to perform effectively. and, ultimately, competition for young talent is going to get tougher. our so - called population pyramid already looks more like a mushroom. there are fewer and fewer young people entering the labour market, yet demand for highly qualified young workers in particular is growing ever larger. on the surface, it might seem reassuring that today ’ s students seem particularly drawn to a career in the public sector. students do not rate other sectors, such as the car industry, nearly as highly. and a third of students would like to work solely in the public sector, not in private industry. ladies and gentlemen, as public - sector employers that is, of course, music to our ears. yet i have my concerns about this desire among young people to work in the public sector. after all, germany ’ s economy is doing well, and there are a whole host of opportunities on the labour market for young people with qualifications. i feel that, for society as a whole, it is better if the mood among young people does not become too biased towards security and reliability. ultimately, a market economy does not thrive on the work of public authorities but on successful business activities. germany ’ s prosperity is founded on innovation and the willingness of companies and their employees to take risks ; it is based on them truly engaging with their customers ’ needs and on their openness to the rest of the world. and public authorities should create the best possible conditions for all this to take place. bis central bankers ’ speeches given the changing needs in today ’ s environment, we too need to innovate and be willing to adapt. 3. the bundesbank also constantly has to adapt to new challenges i ’ d now like to give you a brief overview of the major challenges that the bundesbank has faced since the turn of the millennium. the environment in which the bank fulfils its statutory mandate has undergone numerous and major changes. and that is why the bank already began with its target - based management more than ten years ago. in 2002

sharp moderation in consumer spending and the fall in foreign demand for all south african exports. in other words, south african exporters outside of the commodity sector might have benefited marginally from higher domestic prices, but only for a short period as their input costs escalated. as those costs rose, the likely interest rate response to the inflationary effects of the exchange rate drop would have squeezed domestic demand even as rising inflation appreciated the real exchange rate and reduced the initial improvement in competitiveness. south africa ’ s policy discourse at the time, centered on the need for a fiscal stimulus response to the fall in foreign demand and slowing domestic economy. this was incompatible however with a macroeconomic response to those advocating a moderation in the appreciation of the currency as it rebounded from the overshot depreciation in late 2008. in addition to the positive economic factors driving the resumption of capital inflows – the sound public debt position and high commodity prices – the high inflation rate and growth in unit labour costs were driving up the real effective exchange rate. the current account deficit remained high as a result of growth in gross domestic spending exceeding growth in domestic production. these factors meant that monetary policy alone – lowering the policy rate to reduce carry trade – could not have prevented the appreciation of the nominal and real exchange rates. to prevent the real appreciation would have required macroeconomic policy tightening to rein in domestic expenditure and moderate inflation. in practice this meant either that the foreign currency public debt would have to increase by the amount the authorities were willing to intervene in the foreign exchange markets, or fiscal policy would have to adjust to find the resources for foreign currency purchases out of current spending or from increased revenue. short of increased borrowing and the implications for long - term interest rates, the other options entailed reducing public spending on current programmes or tax increases. the approach taken was to provide funding to purchase foreign currency inflows from foreign direct investment. where there has been insufficient rand available for this purpose, forward market foreign currency swaps were conducted to finance the reserve purchases. even the efficacy of macroeconomic policy adjustment to achieve the real depreciation is in doubt. despite the sharp punctuations of risk aversion resulting in sales of emerging market assets, global macroeconomic rebalancing has been marked by a sustained flow of capital out of some advanced economies and into faster growing and higher return emerging and developing economies. for economies like south africa that for one reason or another are seen as good investment destinations,