andreas dombret : shadow banking and the roots of international cooperation speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at a reception to bid farewell to mr winfried liedtke, financial attache, and to welcome his successor, mr thomas notheis, beijing, 29 october 2014. * * * ladies and gentlemen welcome to our reception here in beijing. i am happy to have the opportunity to officially thank the bundesbank ’ s departing representative, winfried liedtke, and to welcome his successor, thomas notheis. allow me to say a few words on the roots of international cooperation. not too long ago the saying was that when the united states sneezes, the world catches a cold. this is certainly still true, and the turbulence following the federal reserve ’ s announcement of tapering was a case in point. however, the world economy of today is no longer a unipolar system. take china as an example. china is now the second largest economy in the world, and the imf estimates that, measured in purchasing power parities, china might have overtaken the united states in 2014 to become the world ’ s largest economy. thus, china is an important player on the global stage. according to imf data, china accounted for more than one third of global economic growth in 2014. at the same time, it promotes growth in other parts of the world through trade linkages or direct investment. over the past six years, chinese imports grew by an average of 12 % per annum while china ’ s foreign direct investment reached a new record in 2013 with a total of more than us $ 100 billion. however, no one can deny that a global player can also be a global risk : when china sneezes, the world might catch a cold, too. consequently, the imf has recently warned that a hard landing in china might pose a risk to the world economy. nevertheless, globalisation has not just taken us from a world economy that was dominated by one country to a world economy that is dominated by two countries. the world in which we live has become very small over the past decades. and in a small world, every policymaker in every country must be aware that his or her decisions can influence other countries as well. the world is interconnected by a close - knit network of trade relations and through a globalised financial system. financial markets in particular have become integrated to such

climate uncertainties ” ). climate and econometric models that integrate different climate scenarios and their potential economic impacts to assess these risks are being developed and refined, but measuring the economic costs of climate change ( and of climate policies ) is a work in progress. we can assess the immediate costs of more frequent and intense natural disasters, but most of the potential costs lie beyond the typical horizon of economic and financial analyses. climate change risks can unfold through the economy, especially if the transition to net zero emissions proves poorly designed or hard to coordinate globally, with ensuing disruptions to international trade. financial stability concerns arise when asset prices adjust too quickly, reflecting unforeseeable realisations of transition or physical risks. however, it is unclear how much today ’ s asset prices reflect the extent of the policy actions required to limit global warming to [UNK] or their impact on the economy and the financial system. a major challenge for financial investors is then how to align the incentives to channel 1 / 2 bis central bankers'speeches entrepreneurship towards productive and beneficial activities such as technological innovation and, at the same time, prevent unproductive destructive activities that damage the environment. this is why we believe that interacting with start - ups and fintech in such endeavour could be very useful, and why we are today in milan where our financial innovation centre, the bank of italy ’ s milano hub, has recently started to operate. indeed, we are convinced that this interaction may bear considerable fruits in several areas. currently, we are looking for contributions in the field of artificial intelligence in improving the provision of banking, financial and payment services to businesses, households and the public administration. the proposals should focus on financial inclusion, sound consumer protection, and data security. to conclude, this techsprint seems to me a well - designed contribution to foster innovation in an area, such as the fight against climate change, where both data and methodological gaps prevent accurate and sound data - driven solutions. it attempts to spur the public and private sector to identify profitable cooperative solutions aimed at achieving sustainable development goals. winners should go well beyond the prizes, towards the pursuit of reliable and sound solutions for sustaining the development of a solid green finance market. and we encourage all finalists to continue to refine their proposals, because financial authorities and market players avidly await new technological solutions to bridge the present informational gaps. if fostering interaction and competition among companies is important in normal times, it is even more so in times when problems are more