burkhard balz : overcoming challenges together address by mr burkhard balz, member of the executive board of the deutsche bundesbank, to mark the occasion of a bundesbank representative taking up office in riga, riga, 31 january 2024. * * * check against delivery 1 words of welcome ladies and gentlemen, it is a great pleasure for me to be at the german embassy in riga today and to celebrate with you the official start of nikola marcinko's duties as the bundesbank's representative here in latvia. 2 eurosystem, monetary policy and cooperation 2024 is a year of european anniversaries. twenty - five years ago, on 1 january 1999, the euro was introduced as a single currency in eleven european countries, including germany, as an accounting currency. three years later, people in twelve european countries got their hands on euro banknotes and coins for the first time. twenty years ago, on 1 may 2004, latvia acceded to the european union ( eu ) together with nine other countries. 1 ten years later, on 1 january 2014, latvia became the 18th country to adopt the euro. latvijas banka became a member of the eurosystem. 2 today, the euro brings together people from no fewer than 20 countries. it is the currency for almost 350 million people and a symbol of europe. the euro is a binding force that promotes economic and political unity throughout our continent. alongside the single market, it plays an important role in nurturing economic prosperity and contributes to strengthening europe's resilience and sovereignty, including on the global stage. but the history of the euro has not been all sunshine and roses. the single currency has also had to weather a few storms. take, for example, the financial crisis that erupted in 2007 and the sovereign debt crisis that came in its wake. or the coronavirus pandemic and the russian war of aggression against ukraine. the resulting supply and energy shortages contributed significantly to the sharp rise in inflation rates. 3 4 to prevent the strong inflation dynamics from becoming entrenched, the ecb governing council responded forcefully, raising key interest rates ten times in a row between july 2022 and september 2023. inflation in the euro area has since eased significantly. this was due, in particular, to the sharp fall in energy prices, but it is a result of monetary policy tightening, too. 1 / 3 bis - central bankers'speeches nevertheless, the inflation rate for

rigorous monitoring can contribute to ensuring a global level playing field. the results of numerous monitoring exercises are summarised in regular scoreboard and progress reports to the g20. in addition, international standard - setting bodies are stepping up their implementation monitoring instruments. to better coordinate the various bis central bankers ’ speeches mechanisms, the financial stability board, or fsb for short, and the relevant standardsetting bodies have jointly developed a coordinating framework. within this framework, six areas have been designated as deserving priority implementation and particularly intensive monitoring. i will now briefly address four of these priority areas – leaving out those dealing with sifis as another round table today is dedicated specifically to the regulation of sifis. a. basel framework first, the crisis made painfully clear that banks ’ equipment with capital and their liquidity positions were inadequate to withstand shocks to the financial system. the new regulatory standard basel iii will improve the resilience of individual banks with respect to both their capital and liquidity positions. basel iii allows some discretion in national implementation : for example, the transition period permits jurisdictions to determine how quickly they adopt the new rules – which will depend on both the state of the national financial system and the macrofinancial environment. moreover, as basel iii is an international minimum standard, jurisdictions might adopt tougher rules than the internationally agreed versions. considering the significant differences in the size of banking sectors relative to domestic economies and the implied potential consequences in case of bank failures, i believe this to be a sensible approach. at the same time, it poses the danger of inconsistent implementation and of raising prudential or level playing field issues. therefore, the basel committee on banking supervision ( bcbs ) will monitor on an ongoing basis the status of jurisdictions ’ adoptions of the basel rules, following a three - level approach : first - level assessments focus on whether the rules are adopted according to the agreed timelines while the second level deals with the content of the domestic rules. the third level extends the analysis of domestic rules to supervisory implementation at the individual bank level to assess whether they are delivering comparable outcomes. initially, third - level assessments will focus on the calculation of riskweighted assets across banks and jurisdictions. as the adoption of basel iii – in contrast to its predecessors – has been fully integrated into the political process, the commitment to implement the new rules is extremely high. europe is playing a pioneering role in the adoption process via the capital requirements directive iv. i am confident that the comprehensive monitoring by the