to behave accordingly – especially also with an awareness of responsibility for the stability of the monetary union as a whole. all countries are being called upon here, but particularly the large countries. their behaviour sends a strong signal, and they therefore have to be aware of their particular responsibility and also act accordingly. the restoration of compliance with the provisions of the stability and growth pact must not be permitted to become a target which is put off ad infinitum. fiscal consolidation agreements need to be adhered to. this has nothing to do with a “ saving or austerity dogma ” but simply reflects the fact that lasting confidence in fiscal policy is hard - won and needs to be defended time and again. the disciplining effect of the capital markets for fiscal policy will be an important factor. in the past, the capital markets have not always exercised this function to the fullest. this, too, was revealed by the crisis. it is therefore important to reinforce the principle of independent fiscal policy responsibility built into the founding architecture of monetary union. those who have control over fiscal policy decisions also need to bear the consequences. that is the only way to ensure sound public finances, especially in monetary union. bis central bankers ’ speeches 3. on the current exchange rate discussion ladies and gentlemen, public debate has recently also been permeated by another topic : the euro ’ s exchange rate. in this connection, one can increasingly hear calls for monetary policymakers to take on a more active role with regard to exchange rates. this is associated with the desire for monetary policymakers to, wherever possible, ensure that the euro ’ s external value is maintained at a level regarded as appropriate and, if need be, to act decisively to avert a potential further appreciation. as we know, such debate and the attendant demands are not new. these are mostly based on the idea of using monetary policy means to devalue a country ’ s own currency in order to promote growth and employment. in order to strengthen growth and employment in the euro area over the long run, however, the member states will have to ensure competitive economic structures. put loosely, the exchange rate is like the well - known peppermint drops from the packet : “ if they ’ re too strong, you ’ re too weak. ” since the beginning of monetary union, euro - area monetary policy has been primarily geared to maintaining the currency ’ s purchasing power – and for good reason. the euro ’ s exchange rate, however, is not

jurgen stark : investing today in the world of tomorrow welcoming speech by dr jurgen stark, deputy governor of the deutsche bundesbank, for the deutsche bundesbank spring conference 2000, held in frankfurt on 28 april 2000. * * * ladies and gentlemen, i am happy to welcome you here at the bundesbank ’ s second spring conference, also on behalf of the president who unfortunately is unable to attend. i am glad that you have come, some of you from very far, to join us in a discussion of problems which are of great interest to academics and economic policymakers alike. this spring conference is indeed designed to promote an exchange of views between economists and politicians from germany, europe and overseas. last year ’ s conference, which took place shortly after the start of monetary union, focused on the monetary transmission process in general and in europe in particular. this year ’ s conference will focus on investment. there are certainly enough reasons for choosing this topic in a world where technological progress and a modern capital stock are often considered to be the key to prosperity and where the basic investment conditions are changing in many ways. at the same time it is probably not going too far to say that many questions as to the behaviour of investors still remain. if this conference helps us to better understand investors ’ behaviour, to judge the significance of some basic conditions more adequately and to assess more precisely the impact of investment decisions on economic growth and prosperity in our countries, it will surely have been worth the trouble of coming to frankfurt. academics and economic policymakers have been debating the importance of investment and its determinants for a long time. some of the topics discussed are similar all over the world, for example implications of globalisation for the investment process. on the other hand in some respects focal points of the debate in the us differed from those in europe. in the us formerly an unsatisfactory productivity growth and more recently the debate on the new economy played a key role. in europe we had some other main topics. let me just briefly sketch some of the issues which have time and again played a role in germany and in europe over the past few decades. after the investment ratio declined distinctly in connection with the first oil price shock in the mid - 1970s, interrupted only by the reunification boom in germany, low investment resurfaced in germany and other countries as a matter of concern. in the second half of the seventies the situation was given a name in germany, “ investment backlog ”, and an