the financial system. after all, the financial sector is not only a part of the economy with a distinct value added – although this value added can be quite significant, as in the united kingdom. even more importantly, the financial system also plays a crucial role in capital accumulation. however, especially in highly developed economies that typically boast sizeable and sophisticated financial sectors, the role of the financial system goes far beyond that of mere capital accumulation. in such economies, the financial system plays a key role in identifying and funding innovations, thus helping to advance the state of technical knowledge and promoting technological progress. for these reasons alone, an efficient financial system is indispensable for growth. in a sense, even the crisis with its massive repercussions for the real economy and its enormous costs illustrates how important the financial system and its stability are for economic performance and welfare. with that in mind, it becomes obvious that the reform of financial regulation will not only have a profound impact on the financial system itself but will also influence the real economy. the question at issue is whether the reforms strike the right balance between financial stability and economic growth. in fact, the development of basel iii has been accompanied by concerns that tighter regulation might have a negative impact on economic performance by severely restricting access to credit. however, a comprehensive cost - benefit analysis by the basel committee on banking supervision has revealed that fears of a significant negative impact on growth are unfounded. this is all the more the case given that there will be an adequate transition period before the new requirements enter fully into force, which will give bis central bankers ’ speeches banks sufficient time to strengthen their capital base. this favourable overall assessment of the macroeconomic impact of well - designed regulatory reform highlights the fact that there is no inherent conflict between the objectives of a more stable financial system and of ensuring strong and sustainable growth. 4. conclusion ladies and gentlemen, the crisis has certainly been a devastating event. but it has also presented the chance to make the financial system more resilient. trimmed down, where necessary, to activities with an unquestionable positive net social value added, it can once again be an important driver and catalyst for economic growth. and, in terms of the general future outlook for growth, we should bear in mind that the financial crisis has not impaired major growth drivers. emerging markets, for instance, will still make great efforts to catch up, and technical progress will continue. thus, the crisis certainly does not mark the end of economic growth

. in addition, the construction boom witnessed in other euro - area countries also came to an abrupt end during the crisis, with the result that the ratio for the euro area excluding germany has now returned to levels close to the german ratio. this effectively disproves claims that the german private sector is investing too little, be it by historical or international standards. in any case, it is not possible to increase private investment by decree. when it comes to private investment decisions, expectations pertaining to growth and income are of pivotal importance. against this backdrop, many commentators point to public investment, which can be directly influenced by the government. with regard to public investment, germany lags well behind the rest of the euro area. however, this fact alone does not justify assertions that the state should invest more. even so, public net investment has been negative for some time now, and there indeed seems to be room for improvement. infrastructure weaknesses can inhibit growth considerably and there are certainly regional shortcomings in germany. while a good public infrastructure is important, it does not require higher debt. nevertheless, germany has a good infrastructure on the whole. according to the global competiveness ranking of the world economic forum, only six countries have a better infrastructure ( the us is ranked 12th ). the medium - term growth prospects of the german economy also depend, of course, on an improved economic outlook in the other euro - area countries. this brings me to the second part of my speech : the future of the monetary union. 3. the euro area – structural reforms needed when the euro - area crisis began five years ago, many people referred to it as the “ euro crisis ”. however, it was not a currency crisis but a cocktail consisting of a debt crisis, a banking crisis and a balance of payments crisis. while the underlying problems differ slightly between individual countries, the key to overcoming the crisis lies with the affected countries themselves. in the years following the introduction of the euro, fiscal and economic policies in some member states failed to meet the requirements of a monetary union. these countries bis central bankers ’ speeches experienced strong capital inflows. unfortunately, the lion ’ s share of this capital flowed into private or public consumption or into an oversized housing sector. on the back of heavily exaggerated growth expectations, a decrease in competitiveness owing to generous wage settlements and insufficient financial regulation, sizable imbalances accumulated which then contributed to the crisis. hence, to resolve the crisis it is the countries themselves that