speeches oriented, domestically driven economic model ; if we look at it that way, we have no cause for anxiety. and those countries which derive a large proportion of their value added from commodity exports are likely to benefit from the latest recovery of commodity prices, especially the significant increase in oil prices. by contrast, the united states and united kingdom recently saw a slight deceleration of growth, with us growth being curbed by the oil industry delaying investment, amongst other factors. private consumption was also on the weak side in both countries. on the other hand, the euro area got off to a good start in 2016. gross domestic product grew by a healthy 0. 6 % on the quarter. lively domestic demand, which benefited from low oil prices and the accommodative monetary policy, was a pillar of the upturn. however, another decisive factor was the surprisingly mild weather at the start of the year, which boosted, above all, the construction sector. the strong first - quarter growth should therefore not be extrapolated to the year as a whole. on aggregate, the euro - area economy ’ s growth path is still only tepid at present. the latest eurosystem staff projection has the euro - area economy growing by 1. 6 % this year, with 1. 7 % growth assumed for each of the coming two years. economic growth in germany is looking relatively similar, even though the situation – seen, for instance, in terms of capacity utilisation and labour market indicators – is significantly better than in the rest of the euro area. our country did, after all, post respectable first - quarter growth of 0. 7 %. however, even in germany, aggregate economic growth will peter out somewhat as the year progresses. bundesbank economists are expecting growth of 1. 7 % this year. owing to the difficult external environment, growth is projected to decelerate temporarily to 1. 4 % for 2017 before then climbing back up to 1. 6 % in 2018. 3. 2 monetary policy for us as central bankers, macroeconomic analysis is, of course, not an end in itself. after all, our mandate is not to steer the economy but instead to maintain price stability. economic growth, however, is one determinant of enterprises ’ capacity utilisation and their scope for raising prices. it also indicates how much leeway wage bargainers have in wage negotiations. inflation rates have been very low for some time now in many currency areas, and the euro

the public is already beginning to trade in their €500 notes for smaller denominations. the quantity of euro notes will therefore tend to rise overall – along with the costs of their manufacture, quality assurance and transportation. at least the €500 note will remain legal tender and can be exchanged at national central banks for an indefinite period of time. in other words, €500 notes still in circulation will not be recalled or withdrawn. this means that an approach which we at the bundesbank have always practised has prevailed. in my view, this is an important point. any other action would not have been conducive to confidence in the single currency. moreover, the debate on the abolition of the €500 note has led to the governing council of the ecb coming out clearly in favour of cash. this signal is especially important in the current lowinterest - rate environment, as restrictions on the use of cash are, in some cases, mentioned in the same breath as proposals to do away with cash altogether, as that would be one way of making it easier to broadly push through negative deposit rates in the context of an even more accommodative monetary policy. however, in my opinion, such proposals would be wrong and an entirely disproportionate response to the monetary policy challenges close to the zero lower bound. the right approach is more a question of strengthening the growth forces in the euro area as a way of moving rates away from the zero lower bound going forward. and there ’ s another thing i wish to express very clearly : there is no need to loosen monetary policy any further in the current environment, either. let me explain this briefly below. 3. economic activity and monetary policy 3. 1 economic activity the global economy is on a moderate growth path. though its momentum is weaker now than we had expected a little over half a year ago, the fears that prevailed in the financial markets every now and then did not materialise. however, right now we are seeing a shift in the dynamics of growth. in the emerging markets, where the situation had clouded over perceptibly at the beginning of the year, the situation is stabilising to a degree. the recessionary tendencies plaguing russia have died down, although a sustainable recovery is not yet in sight. in china, growth prospects repeatedly required downward revisions in the past. the shift in growth seen thus far, though, is consistent with china ’ s transition to a more services - bis central bankers ’