turmoil – the trigger for the recent financial market turbulence, the speed at which it spread across global financial markets and its persistence were not foreseen, but that does not conflict with my statement. far from it – financial stability analysis does not aim for clairvoyance. instead, it is most likely that financial crises will continue to emerge in spite of perceptible progress in financial stability analysis. but the crucial point is that their impact can be alleviated by warnings, moral suasion and – if necessary – adjustments to the institutional and regulatory framework. for this reason, further improvement in the framework for financial stability analysis is a very high priority for central banks. 3. 2 dealing with episodes of financial instability there is yet another reason why central banks need to keep well - informed on financial market developments. the turmoil that has been affecting global financial markets since summer last year has been a further example of central banks not only taking a predominantly passive role in analysing and commenting on financial stability, but also of playing an active part as well. indeed, the role of central banks in crisis management dates back to the 19th century and was reflected in the views of thornton and bagehot. both noted that a central bank should – under specific conditions – provide liquidity to the banking system as a lender of last resort. and that is exactly what happened when the crisis in the us subprime market triggered a rapid loss of confidence among financial intermediaries on a global scale. as a result of it, uncollateralised interbank lending has been muted – the reasons for which are twofold. on the one hand, banks ’ willingness to lend has fallen sharply due to mounting counterparty risks. on the other, the uncertainty banks face with respect to their own longer - term liquidity planning has increased considerably. to alleviate ongoing tensions in interbank money markets, central banks from all over the world have acted as liquidity providers of last resort to the banking system. as for the eurosystem, we have so far stood the test in this challenging environment. owing to the broad design of our liquidity operations toolbox, the eurosystem ’ s operational framework has had to change only slightly since the outbreak of the financial market turbulence. what is more, the eurosystem succeeded fairly quickly in reestablishing confidence in the functioning of the euro money market by promptly injecting additional funds on a temporary basis. we shall continue to provide liquidity flexibly

there is a kernel of truth in the argument that the us dollar is strong, the united states has, up until recently, enjoyed a very favourable competitive position for almost a decade. these ups and downs in exchange rates, and thus also in terms of price competitiveness, are entirely within the realm of normal fluctuations. in any case, the thesis that foreign currency manipulation is to blame for the strength of the us dollar at the moment is definitely not backed up by the facts. i might also add that the most recent increase in the value of the dollar will probably be a home - grown phenomenon, having been triggered by the new administration ’ s policy announcements. the fact that germany ’ s economy is highly competitive certainly isn ’ t the outcome of manipulative policy, either. its competitiveness does, however, have something to do with the external value of the euro, which, besides other factors, is being depressed by the ecb ’ s monetary policy, which has not been undisputed in germany. it ’ s a fact of life that the single monetary policy is geared not to the above - average economic situation in germany, but to the weaker euro - area average. the german economy ’ s price competitiveness at the moment is roughly 6½ % higher than its long - term average, as measured since 1975. but german enterprises are above all competitive because they are excellently positioned in global markets and boast innovative products. and it ’ s not just businesses like basf, boehringer ingelheim or schott we should be thinking about here. germany is also home to hidden champions, remember – small and medium - sized enterprises which, outside the public eye, have risen to become global leaders in their respective markets – many of which are based here in the state of rhineland - palatinate. now, you don ’ t need me to tell you that germany doesn ’ t just export a great deal – we also export far more than we import. this means that we have a very high current account surplus, which has been held against us in the european and global arena on repeated occasions, not just of late by the new us administration. but what should we make of it? let ’ s begin by saying that a current account surplus indicates that a country is saving more than it invests domestically. of course, it does not make sense for a national economy to produce more than it consumes and invests. because of the foreseeable demographic change, current account surplus