joachim wuermeling : prospects for european monetary union speech by prof joachim wuermeling, member of the executive board of the deutsche bundesbank, as part of the " finanzwelt europa " ; series of talks hosted by the landesbank hessen - thuringen and the representation of the state of hessen to the eu, brussels, 11 october 2017. * * * 1. introduction ladies and gentlemen this is the second time i have had the pleasure of visiting the representation of the state of hessen in brussels this year. in june, i spoke about current developments in the euro area at a lunchtime event dedicated to financial market policy. since then, a number of occurrences have affected all of us as european citizens, in our economic and political roles, and also at the bundesbank. the fact that the landesbank hessen - thuringen and the representation of the state of hessen to the eu are coming together to discuss europe as a financial community in its “ finanzwelt europa ” series of lectures highlights the important role that hesse plays in europe ’ s financial framework. i would therefore like to thank the organisers for giving me this opportunity to talk to you. the bundesbank operates in a policy field that is already communitised in the euro area : monetary policy. our bundesbank logo consists of yellow stars on a blue background, which shows how strongly the bundesbank considers itself part of the eurosystem. the eurosystem can only pursue sound monetary policy in a stable currency union. this is why the bundesbank is taking part in the current reform debate. the title of my speech contains a key term : “ prospects ". i believe it is almost more important now than ever to talk about the prospects of the eu and the economic and monetary union. the word “ prospects ” has several layers of meaning. first, it can imply guidance – a compass or a roadmap. what should the eu look like in one, five or ten years ’ time? second, it generates clarity, hope – and ideally even enthusiasm. if the debate surrounding european policy is outlookbased instead of being limited to questions that are certainly important, but rather technical ; if the citizens of europe can see which direction we are heading, then it becomes clear what europe stands for and why it is worth standing up for europe. and third, prospects always point to the future. those who are forward -

earlier. however, we have been, and will continue to work closely with apra. we continuously update one another on our prudential regulations, we maintain a strong working relationship, and we also respect each other ’ s objectives as regulators aiming to protect our respective financial systems. conclusion with new zealand ’ s macroeconomic policy framework and strong financial sector soundness, investors can have long - term confidence in new zealand as an investor destination. the prospects of sustainable and productive growth are enhanced through predictable macroeconomic policy settings and avoidance of financial crises. economic and other shocks have constrained new zealand ’ s economic performance historically. although our macroeconomic stability has improved in recent decades, we remain vulnerable to external and domestic disturbances. overall debt levels remain high while the concentration and persistence of high - leverage within segments of the household and agricultural sectors questions the quality of banks ’ lending standards. the more enduring that low interest rates are, and the more successful they are in promoting borrowing and investment, the more they are likely to pose challenges to the reserve bank ’ s financial stability objectives. the reserve bank has a number of tools it applies to manage financial stability risks, and its lvr policies have a role in limiting the risks that could arise from increasing leverage through inadequate lending standards. more capital is a key part of building new zealand ’ s economic resilience for when severe shocks do occur. we are in the process of weighing up the costs and benefits of how much more and the type of capital that is appropriate for the desired level of resilience, and the timeframe to achieve it. decisions on the capital review are expected to be released in the first week of december.