joachim wuermeling : current challenges in europe – a central banker ’ s perspective speech by prof joachim wuermeling, member of the executive board of the deutsche bundesbank, at the money marketeers of new york university, new york city, 29 march 2018. * * * 1 introduction ladies and gentlemen thank you very much for inviting me to speak to you here on wall street – any self - respecting central banker would jump at the chance to greet an audience on the world ’ s most renowned street of money and finance at least once during their career! i was fascinated to learn that wall street got its name from a protective wall built back in the 17th century, and that the new york stock exchange was founded there in the late 18th century. it ’ s remarkable that a protective wall has come to be synonymous with an open global financial centre where people from all over the world meet and do business together. despite its name, wall street has never benefited from walls. quite the opposite, in fact : it has profited from tearing down walls, from eliminating tax barricades and trade barriers. there are three topics i would like to emphasise in my speech today that all have something to do with walls : first, i would like to offer an outlook on the current political situation in germany and europe. as you all know, germany benefited tremendously – almost 30 years ago now – from a certain wall being torn down, with the help of our european and american friends. second, i would like to touch upon monetary policy and economic developments in the euro area, and i am sure that the ecb ’ s decisions on monetary policy that might be in the pipeline will have an effect on wall street. third, i would like to share a few thoughts on free trade, and on the difficulties and risks posed by walls and barriers in our globalised economies. 2 current political situation in germany and europe looking at what the media say about europe these days, you might be forgiven for thinking that the “ old continent ” is hurtling towards chaos. a headline of the new york times springs to mind, which read : “ chaos in catalonia ”. the huffington post wrote about the “ brexit chaos ”. and the washington post fears that the eu might even cease to exist : “ what the e. u. must confront if it wants to survive ”. let me assure you : the future of europe is not really on the rocks, despite what these headlines might suggest. it is

. if the microprocessor ’ s breakthrough in the early 1970s constitutes the starting point, then it will presumably be another couple of decades before any sizeable economic effects are discernible. counting instead from the invention of the computer in the mid 1940s, however, means that we could already be in the beginning of a phase of rising productivity and growth. nevertheless, i believe it is till early to be able to provide an unequivocal answer to this question. what is clear is that electronics and microprocessors have revolutionised telecommunications and household appliances such as tv sets, videos and music equipment. we give little thought to the fact that microchips are now to be found in the simplest kitchen appliances. they are a part of our daily round. bear in mind, moreover, that there are no doubt applications that have not yet been exploited with the more powerful and, above all, cheaper capacity of new computers. electronic techniques were used in the 1970s to produce electronic components and equipment. in the 1980s, computer hardware and programmes were developed, along with various services that made it possible to incorporate computers in many fields. the pressure for change has shifted to software and know - how. in the 1990s software became more standardised and attention focused on attempts to create new infrastructure, for instance by extending the internet. the new infrastructure has enabled globalisation to take a large step forward. a good example of a field where the new technology has been utilised for strong growth is the financial sector. no one now dwells on the fact that the financial sector largely stands or falls with the new technology ; it has become commonplace. tv satellites and the internet have paved the way for new and better means of communication. that in turn has provided a base for the growth of many new types of services. many people now use the internet for bank transactions. buying and selling goods on the internet is still fairly limited but is growing. today, most people in sweden have access to news and entertainment from all parts of the world. firms have had to adapt to new markets and new conditions for distribution. new enterprises and new rules follow in their wake. as the new technology becomes cheaper, it also becomes available for more and more applications. one example is biotechnology, where the conditions for research and product development have changed completely. new companies are now being established. swedish enterprises have quickly gained a leading position in the new fields. sweden can be said to act as something of a european centre for the new information