were to happen, we would be faced with a recession. its scale would depend on many uncertain factors. these include households'gas consumption, temperatures and the effect of policy measures. one thing is for sure : gas shortages would amplify downward forces. the european commission is expecting the german economy to shrink next year, with a decline of 0. 6 % anticipated by experts. projecting growth of - 0. 2 %, the german council of experts is somewhat more optimistic. 2 / 5 bis - central bankers'speeches the inflation rate in germany is far too high. it rose further in october to reach 11. 6 %, hitting its highest level in more than 70 years. inflation as measured by the hicp is expected to be above 8. 5 % in 2022. this is largely due to the russian war of aggression against ukraine and its consequences. however, inflation was already on a strong upward trajectory even before the war broke out, what with the global economy recovering unexpectedly quickly from the coronavirus crisis. supply wasn't always able to keep up, and supply chains were disrupted. inflation in germany will probably remain high next year, too. i believe it is likely that, on an annual average, we'll see a seven before the decimal point. and the risks are clearly tilted to the upside given the tensions in energy markets. as for the euro area, the impact of the energy crisis will likely be less pronounced than it will be on germany. which is why the european commission is expecting economic output in the euro area to still increase slightly in 2023, in contrast to germany. economic activity in the euro area, too, is being hampered not only by tensions in the energy market but also by high inflation. the substantial upward pressure on prices is broad - based. it is dragging on private consumption, in particular. this year, consumer prices in the euro area have risen time and again at rates not seen since the introduction of the euro. at 10. 6 %, the october rate was the sixth all - time high in a row. core inflation stood at 5. 0 % in the same month. and for the next two years, the inflation forecast last published by the european commission provides figures that are noticeably above our medium - term inflation target of 2 %, namely 6. 1 % for 2023 and 2. 6 % for 2024. however, the forecasts should be interpreted with caution, as the outlook is highly uncertain at present. price dynamics have been under

crucial to enhance the functioning of the maastricht framework, which is – as it has to be recalled from time to time – still the legal foundation of the monetary union. last but not least, hans - werner sinn unquestionably deserves special acclaim for pointing the public ’ s attention on the impact of central banks ’ crisis measures. he anchored his criticism in the discussion at one specific keyword : the balances of the “ trans - european automated realtime gross settlement express transfer system ”, known as target for short. he even dared to write a book about that topic, which was previously known to only a handful of experts. i am sure that no one else than hans - werner sinn could have taken such an unwieldy subject and propelled it to the top of the german bestseller list for business books. bis central bankers ’ speeches i don ’ t wish to rehash the whole target debate here. the bundesbank shares many of the observations made and conclusions reached by hans - werner sinn. however, our opinions do differ in several points of analysis. for instance, we don ’ t see the target system as the problem per se, but rather as a system that reflects existing problems in the euro area. above all, the underlying risks stem from the provision of liquidity and the liquidity provisioning framework, as well as in the subsequent cross - border distribution of liquidity. similarly, in banking, it is the non - performing loan that is a potential risk, not the payment system through which the payments were routed. consequently, our critical appraisal focuses on aspects of such liquidity provision where the boundary between monetary policy and fiscal policy is in danger of becoming blurred. for example, when emergency liquidity assistance is granted on a very large scale, the collateral framework is severely watered down, or when government bonds are purchased. this is doubtless in keeping with hans - werner sinn ’ s views. but our views probably differ in our assessment of the risks that the target system presents for germany, say. despite some differences of opinion it is without any doubt one of hans - werner sinn ’ s outstanding achievements that he has fostered intense broad public debate – even though the sometimes sharply propounded arguments did not always make life easier for us in the eurosystem. 5. conclusion dear hans - werner sinn, arthur schopenhauer once wrote : “ there is no greater consolation in age than the feeling of having put the whole force of one ’ s