##lsters the banking sector's resilience. this makes a loss of confidence in national banking systems less likely. and less danger of a fragmented financial system stabilises lending, particularly in turbulent times. a common european deposit guarantee scheme could, in theory, even heighten this confidence. however, as with any insurance policy, one would have to make sure in this case, too, that the insurance does not cover losses which have already occurred, like bad loans already on banks ’ books, and that the insurance does not encourage careless behaviour in the future. and, in my view, the preferential treatment of sovereign debt on banks ’ balance sheets has to be done away with in europe to avoid a mutualisation of sovereign risks through the back door. credit to general governments is not risk - free, as the sovereign debt crisis reminded us in no uncertain terms. one precondition for a european deposit insurance scheme, then, is that the size of government bond portfolios that banks hold on their books is limited. credit to sovereigns should not be treated any differently from credit to enterprises or individuals. 4 / 5 bis central bankers'speeches 6. conclusion ladies and gentlemen on that note, i would like to conclude by recalling something else president kennedy said : " there are risks and costs to action. but they are far less than the long - range risks of comfortable inaction. " to me, that aptly describes the situation germany and the euro area find themselves in. i now look forward to exploring promising avenues of action with you, and wish us all an exciting and rewarding conference! 1 raphael auer & claudio borio & andrew filardo, 2017. “ the globalisation of inflation : the growing importance of global value chains ", bis working papers 602, bank for international settlements. 2 see deutsche bundesbank, the international spillover effects of an expansion of public investment in germany, monthly report, august 2016, pp. 13 - 17, and studies with similar results cited there. 3 allard, c, p k brooks, j c bluedorn, f bornhorst, k christopherson, f ohnsorge, t poghosyan and an imf staff team ( 2013 ), “ towards a fiscal union for the euro area ", imf staff discussion note, 13 / 09. 4 adalet mcgowan m and d andrews ( 2016 ), “ insolvency regimes and productivity growth : a framework for analysis "

german economy to participate in the potentially more dynamic economic growth elsewhere. of course, demographics alone cannot explain the entire german surplus – according to imf estimates, aging accounts for about three percentage points – but it should be taken into consideration. additionally, it should be noted that the latest distinct rise in germany ’ s trade surplus was due to the low oil and commodity prices and a relatively weak euro. and with regard to the latter, the heightened trade surplus is also a reflection of the ecb ’ s very accommodative monetary policy stance regarding the euro area on average. bearing that in mind, it is disputable whether the national current account balances of member states in a monetary union are meaningful at all. on a global scale, it would be more appropriate to refer to the euro area balance, which is significantly lower. while the german current account surplus is projected to decline over the next few years, the current account is not expected to become well - balanced. it will be interesting to see whether the experts in our afternoon session conclude that there is a need for active policy measures by the german authorities. and i am curious to learn what measures would be seen as appropriate, if any. after all, the german surplus is the result of millions of decisions made by enterprises and consumers in germany and abroad. i do not know of any misaligned incentives such as protectionist measures to impede imports or promote exports. and there is obviously no manipulation of the exchange rate to create current account surpluses in germany ; the euro is a free - floating currency. of course, a current account surplus reflects a surplus of savings over investment. to the extent that capital is flowing out of the country due to missed investment opportunities, public policy action is certainly called for. the way to go, then, is to create a more investment - friendly environment in germany. the panellists possibly share my view that improving efficiency in engineering the policy switch to renewable energy or in fostering digitisation, for instance by broadband network expansion nationwide, could serve to stimulate private investment. additionally, removing barriers to entry in the services sector and opening up closed professions could provide an impetus for stronger productivity growth. 5. strengthening the euro area ’ s resilience facing economic challenges head - on will not only prove a boon to citizens ’ prosperity. it will also raise the equilibrium real interest rate. and this will make the job of a central bank substantially 3 / 5 bis central bankers'speeches easier, as it adds