andreas dombret : current challenges facing central banks – the bundesbank ’ s stance speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the ahk ( auslandsaussenkammer ) world conference, berlin, 11 may 2016. * 1. * * introduction dr wansleben, mr machnig, ladies and gentlemen, before i begin, i would like to thank you for inviting me to come here and speak with you today. in germany, foreign trade has traditionally been a cornerstone of its economic success. chambers of commerce abroad make a crucial contribution to the success of german enterprises in foreign markets. you could say that, today, i am visiting the power houses of the german economy, which is why i am so pleased to be here with you in berlin. the motto of this event is : “ where is the global economy heading? ” the answer to this question will be put together like the pieces of a jigsaw puzzle from the various reports of the speakers at your conference, who come from all over the world. within the space of the next 20 minutes, i will try to lay down the foundations for this jigsaw by giving you an overview of the global economic situation. i will also be elaborating on the consequences that this has for monetary policy and for banking supervision in the euro area. 2. economic activity the new year got off to a bumpy start for the global economy, with the economic slowdown in china dampening the new year ’ s spirit right at the very beginning of the year. this was compounded by the sharp decline in oil prices at the turn of the year, which was perceived as having an increasingly detrimental impact on the global economy. furthermore, some financial market players had doubts as to whether an ever more accommodative monetary policy stance can really solve the existing problems. this explains why sentiment on the financial markets was also very nervous at the beginning of the year. the situation has, by and large, calmed down since then, however. according to the international monetary fund, the global economy will continue to recover, albeit at a somewhat slower pace than at the beginning of the year. the major industrial countries remain on a moderate growth path, even though growth in the united states and japan slowed down somewhat in the in the final quarter of 2015 and the first quarter of 2016. nonetheless, the underlying trend is still pointing upwards and developments in the labour markets are not

closely monitor this process. as supervisors, we evaluate the risks for each institution individually – but without losing sight of the financial system as a whole. in doing so, we actively seek out direct exchanges with the institutions. if an institution stabilises its earnings by taking on greater risk, this must be reflected in its overall strategy and be backed by corresponding capital. bis central bankers ’ speeches 5. conclusion ladies and gentlemen i have tried to give you an overview of the global economic conditions. and i have pointed out that, above all, the dampened inflation outlook and the subdued growth currently justify an accommodative monetary policy – even though there are of course side effects, which increase over time, and even though opinion may be divided on individual instruments. with that, i would like to draw my speech to a close. as the saying goes, a speaker should exhaust the topic and not the audience. thank you very much! bis central bankers ’ speeches