of the statutory pension scheme. assuming a far lower pension level and a far higher contribution rate are out of the question in the future, policymakers will probably have no option but to push retirement age higher still. the pension system and other social security funds aren ’ t the only areas where demographic change is making itself felt ; it also weakens the forces of growth in our economy. 1 / 7 bis central bankers'speeches so the positive state of the economy right now should not blind us to the huge challenge which demographic change is also presenting in the sphere of economic policy. in any case, the upbeat economy is no reason to be patting ourselves on the back or resting on our laurels. 2. the german economy the german economy is currently in very good shape. sentiment is also fine : the ifo business climate index rose to a new all - time high in october. businesses are looking ahead with great optimism. according to the latest projection of the german council of economic experts, the german economy will experience real growth of 2 % this year and 2. 2 % next year. the council of economic experts thus finds itself in line with other institutions which have made similar predictions. economic output, then, is outpacing production capacity, which means that utilisation is continuing to increase. a positive factor is that the upturn in germany is not only ongoing, but also becoming broader : besides private consumption, export demand and investment are also making a contribution to growth. the german economy is benefiting from the fact that the global economy, including the countries in the euro area, is regaining momentum following years of crisis - induced sluggishness. according to imf forecasts, the global growth rate, which was 3. 2 % last year, will go up to 3. 6 % this year and 3. 7 % in 2018. this means that world trade, too, will finally gain more impetus, with growth accelerating from 2. 4 % last year to 4. 2 % this year. that is good news for german exporters. the debates on trade restrictions, which are being conducted in some countries, are causing headaches for export - oriented enterprises, however. protectionist tendencies, alongside geopolitical conflicts, are among the most significant downside risks to global economic activity. economic activity, especially in the euro area, is also being buoyed by what remains a very accommodative monetary policy. and let me add that, with inflation still muted, i believe

reflecting the authority ’ s objective of creating an enabling environment for the expansion of the manufacturing sector. one of the most dramatic events that marked the first half of the 1970s was the breakdown of the bretton woods system on the 15th august, 1971. overnight, the world financial system had moved from a fixed exchange rate regime to a floating exchange rate regime. exchange rates of the world ’ s major currencies had ceased to be linked to gold, directly or indirectly. their determination was thereafter left to the inter - play of market forces. many developing countries had adopted some kind of a pegged exchange rate regime which meant pegging the national currency to such a major reserve currency that best served the country ’ s economic and financial interests. the mauritian rupee had continued to be pegged to the pound sterling. since the pound sterling floated as did other major currencies in the wake of the breakdown of the bretton woods system, the rupee floated along with. a flush of liquidity, unsterilized, that had swelled aggregate demand side - by - side with an ever growing fiscal deficit also heavily financed by the central bank money had triggered a tension in the exchange rate of the rupee. the tension was exacerbated by a weakening of the pound sterling as from may 1975. weeks later, on the 30th june, the pound sterling suffered one of its sharpest falls. the effective depreciation of the pound sterling against other leading currencies compared with the smithsonian agreement of 1971 was nearly 30 per cent. it meant that along with the pound sterling, the rupee also had depreciated significantly thus adding further pressures on domestic prices. the double digit inflation rates had turned out to be a major policy concern. inevitably, the exchange rate regime had to be reviewed. on the 5th january, 1976, the rupee was de - linked from the pound sterling and pegged to the special drawing right ( sdr ) of the international monetary fund at the central rate of sdr1 = rs7. 713759. seen in the light of the trade pattern of mauritius, the sdr, a basket of currencies with the us dollar having the preponderant weight, was obviously an import - biased basket. the principal objective of the new peg, while intended to help minimize volatility of the exchange rate of the rupee, was to ward off pressures on internal prices stemming from the external front. so much was the government concerned about