to tighten work availability requirements. in return, the government began topping up low wages. germany ’ s welfare system now paid, as hans - werner sinn put it, “ more for taking part and less for staying away ”. sinn, hans - werner ( 2004 ). das dilemma der globalisierung. forschungsgemeinschaft fur nationalokonomie an der universitat st. gallen. ibid. bis central bankers ’ speeches and the recipe worked as predicted : unemployment began to trend downwards and employment began to rise. the full truth is, however, that this was also supported by a changing behaviour on the part of trade unions and employers ’ associations, resulting in more moderate wage policy and the strengthening of establishment - level agreements as trade unions reacted to the further increase in the already high level of unemployment. these changes allowed germany to rise to the multiple challenges stemming from german unification, the competitive pressures from eu enlargement to the east, and globalisation. by the way, even today and against the background of almost full capacity utilisation the wage settlements are still mindful of their employment effects. the bundesbank ’ s focus with regard to wages is purely analytical. the crucial question is here, whether their development is in line with our main objective : price stability. and in this regard we have in particular to check for second - round effects. according to our analysis such second - round effects can currently be denied for germany. this perspective on wages is not a policy recommendation. not only because we do respect the autonomy in wage bargaining but also because we agree with hans - werner sinn that wage negotiations should not be overburdened by aiming other policy goals – for example by targeting the current account. recent economic policy decisions, however, such as the introduction of the minimum wage and the option to draw a full pension at 63 offered to long - term contribution payers can be seen as a roll - back of the agenda 2010 reforms. and again, these decisions illustrate the key challenge related to policy advice i mentioned earlier : in the short run, where the economic situation and employment is relatively stable, the minimum wage, for example, might even have positive economic effects, as it leads to an increase in the income of the workforce. and consequently, the bundesbank assumed in its macroeconomic forecasts for last year that the minimum wage would have a slight, stimulating growth effect. in the medium term, the consequences of the minimum wage are certainly less

andreas dombret : back home – making the g20 summit commitments work speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the 14th euro finance week, frankfurt am main, 15 november 2011. * * * introduction ladies and gentlemen, the recent g20 summit in cannes was another decisive step towards a more resilient international financial system. the work to develop a new regulatory framework is slowly but surely nearing completion. nevertheless, we still have a long way to go to make the commitments work back home. ultimately, it is the globally consistent implementation and transposition of the agreed policy measures into national laws and regulations that will count. in terms of effectiveness and consistency of these internationally agreed reforms and standards, it is therefore a great plus for the international community that the fsb is strengthening its implementation monitoring. i would like to focus on three key areas where consistent implementation is most critical : 1. addressing the risks posed by systemically important financial institutions ( sifis for short ), 2. strengthening oversight and regulation of the shadow banking system and 3. putting into effect the new capital and liquidity standards for banks, known as basel iii. i would now like to briefly discuss these areas in more detail. dealing with sifis the past few months have witnessed substantial progress in tackling the sifi problem. in cannes, the g20 endorsed the comprehensive policy framework presented to them by the financial stability board ( fsb ). the requirement for sifis to hold additional capital above the basel iii minimum standards – which was specified by the basel committee on banking supervision – lies at the heart of this concept. to this end, an initial set of 29 global systemically important banks has been identified. to take account of dynamics within the financial system, the set will be updated annually with respect to its number as well as its composition. sifis will have to meet the additional loss absorbency requirements with common tier 1 capital, which is a particularly good buffer for covering losses. the specific amount will be determined on the basis of each sifi ’ s systemic importance, currently ranging from 1. 0 % to 2. 5 % of risk - weighted assets. i very much appreciate the fsb ’ s recommendations, as such capital add - ons are an appropriate measure for improving the resilience of sifis, forcing their owners to take greater responsibility for their actions. moreover, they put a price tag on the implicit government guarantee that