joachim nagel : why do we need europe? speech by dr joachim nagel, president of the deutsche bundesbank, at the annual summit of the stern stewart institute, elmau, 19 september 2024. * * * check against delivery 1 global challenges need global answers we are living in a period of significant change. many distinct forces are contributing to this change. examples here include global warming and the switch towards carbon - free energy, progress in digitalisation and ai, as well as geo - economic factors and demographic developments. what do all the changes i've mentioned have in common? they affect humanity at the global level. it therefore does not seem useful to limit one's attention to national solutions. that said, the european elections have shown us that many voters backed parties calling for greater national sovereignty or even nationalism – as well as less europe. the brexit referendum, eight years ago, can be seen as an example of this trend. as, too, can the recent german regional elections. why is this? global changes often lead to global challenges, and sometimes to global crises. this means a lot of complexity. those who are in charge are responsible for properly explaining this complexity. if we don't assume this responsibility, simple political messages may trump complex ones. and there is no doubt that politics at the european level are complex. just think of the legislative process behind the new corporate sustainability due diligence directive – a directive that sets rules for firms to mitigate their negative impact on human rights and the environment. or the slow progress that has been made regarding the capital markets union – a topic i will return to later. however, as the current major challenges are global in nature, national responses alone will not resolve them. action is needed on a global scale. take the pandemic, for example. overcoming this required unprecedented vaccine research, large - scale production and global distribution. or consider the climate crisis. while germany can lead by example in terms of decarbonising its economy, it cannot solve the climate crisis alone. as for european countries, this means that we have to work on european responses to the current challenges. this holds true for germany, too – despite it being one of the largest economies in the world. germany should see itself as part of a wider european team – a team that can provide greater stability given the current geopolitical risks. take the increasing global trade restrictions, for example. between the two main global players, the united states

measures that help europe to act. it is in this context that i return to the topic of the capital markets union. the capital markets union can be an important means of providing companies with the necessary funding to manage change. this includes funding for new scientific knowledge and for innovations to help us thrive in our future environment. europe is relatively good at research. 6 and research is a crucial basis for innovation. however, a lack of available capital often prevents young innovative companies from growing. a key reason is that capital markets in europe are still highly fragmented and rather underdeveloped compared to those in the united states, for example. although market structures are not fully comparable, venture capital investment may serve as an example here. relative to gdp, its size in european countries is less than one - tenth the size in the us. 7 a european capital markets union would give firms better access to risk capital in europe – notably young firms in their start - up and scale - up phase, and it would provide better exit options. by mobilising more private capital, the capital markets union could improve opportunities for economic growth. and it could foster much needed investments in europe's digital and sustainability transformation. 2 / 3 bis - central bankers'speeches it is a real challenge to make progress at the european level and in the 27 member states on the legal initiatives necessary to realise the capital markets union. but if we agree that the changes we see are global in nature, then we should not try to deal with them at the national level. we should strive for multilateral solutions. here in europe, the european union provides a wonderful opportunity to find common approaches that many around the world can subsequently gather behind. i am optimistic that the new european commission will build momentum to move forward – not least with respect to the capital markets union, which was recently given fresh impetus by member states'political leaders. we have the potential to rejuvenate the european idea. a thriving research and innovation ecosystem will support that goal – with stable prices, sufficient financing opportunities and steady growth. let us all do what we can to strengthen europe at the current juncture. 1 european union ( 2024 ), europeans'attitudes on trade and eu trade policy 2 see eurobarometer spring 2024, question sd18a, standard eurobarometer 101 – spring 2024 3 see eurobarometer spring 2024, question qa12, standard eurobarometer 101 – spring 2024 : 62 % say that they are optimistic about the