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

connection with the international role of the euro : – 3 – how fast and to what extent will the euro become a major international investment and reserve currency? can the euro take over the d - mark ’ s role as the second most important investment and reserve currency? naturally, the euro will play a significant international role as an investment and reserve currency. if this does not turn out to be the case, it will be an enormous – and scarcely conceivable – surprise as well as a bitter disappointment. the fact that the euro area is already regarded as a safe haven confirms this assumption. it is simply a fact of life that major international currencies are used by investors from time to time as a safe haven. however, this can also be a problem in certain situations, especially for the exchange rate. but it is the future stability of the euro that will determine its actual role in the concert of world currencies. and two key criteria for this will be • sensible monetary policy decisions by the ecb governing council, and • stability - oriented behaviour in those aspects of economic policy which remain a national responsibility, especially fiscal and wage policies. given such a policy mix, the euro can assume a major international role – in line with the size and economic importance of euroland – and also make its contribution to global stability. iii and that brings me to the subject of this conference : ‘ the euro as a stabiliser in the international economic system. ’ this title expresses great expectations of the future single currency. • in what sense – if at all – does the international economic system need a stabiliser? • and if it needs one, how can a currency help to meet such a need? let me begin with the second question : as a general principle, currencies cannot solve structural problems relating to the global real economy. and as far as the first question is concerned, it must be said that, while the world economic setting is difficult at the moment, there is certainly no cause to talk of a fundamental instability. in recent weeks the financial markets have at least calmed down a little. the world financial crisis which many people predicted looks unlikely to occur at the moment. it is true that a number of countries are currently suffering crises entailing considerable local growth losses : • in the south - east asian countries this is a direct consequence of the financial crisis. but at the moment there are some encouraging signs of an improvement in certain countries. • japan continues to suffer, in particular