sabine mauderer : welcome note - euro finance week - 10th china day welcome note by dr sabine mauderer, vice - president of the deutsche bundesbank, at the euro finance week - 10th china day, frankfurt am main, 18 november 2024. * * * check against delivery ladies and gentlemen. i am delighted to be here today! i would like to underline the vital and close economic relationship between china and germany. in july, i was in china to visit my dear collegues from the people's bank of china. this did not only emphasize our close ties with our colleagues at the pboc. no, it was overall an enriching experience. the hospitality and professionalism i encountered were truly impressive. i was particularly struck by the speed and innovation capacity demonstrated by the chinese and international corporates i visited, both, in beijing and shanghai. international corporates often referred to china as their " training or fitness centre ". germany and china can look back on a long history of economic cooperation, marked by mutual respect and a shared commitment to the economic development of our countries. these close ties have contributed to growth, created jobs, and fostered innovation in both countries. last year, the trade volume between china and germany surpassed €250 billion. 1 naturally, in any relationship there are challenges that need to be addressed to ensure its continued success. i am strongly in favour of a rules - based approach that ensures a level playing field in international trade. for this, but also generally, close dialogue and open communication are more important than ever. this holds especially in times where our economies are facing multiple headwinds and the global political landscape is increasingly uncertain. in this context, allow me to emphasise today how important economic cooperation is for our shared future. as we all remember, we encountered hard times just a couple of years ago. hard – yet insightful. i am referring to the covid - 19 pandemic. 1 a brief look back at a fragmented world – supply chains in the covid era 1 / 4 bis - central bankers'speeches i would like to elaborate briefly on how the covid - 19 pandemic exposed both the vulnerabilities of an interconnected global economy and its strengths. global supply chains were severely hit, as production sites had to close and transportation and distribution across various industries came to a halt. these disruptions had strong adverse effects on the german economy, which relies on efficient and smooth global supply

member states ’ largest creditor, thus further blurring the boundaries between monetary and fiscal policy to a significant extent. ultimately, the government bond purchase programme also means that all governments – regardless of their credit quality – can, in effect, fund a substantial portion of their debt very cheaply. as the central banks are only purchasing the government bonds of their home countries, the member states will recoup much of the interest payable on these instruments at a later date via central bank profits. that can, of course, ingrain certain habits and ultimately encourage countries to put the necessary consolidation of their public finances on the back burner. and that, in turn, could increase pressure on monetary policymakers to keep interest rates low for longer than necessary – even if monetary policy considerations would call for a rise in key interest rates. the mere impression that monetary policy is no longer centred around the goal of price stability could erode its credibility, and central banks would have to make great efforts to combat this. ultimately, deciding whether to make bond purchases is about weighing up which risks are more pressing. on the one hand, we have the risk associated with blurring the boundaries between monetary and fiscal policy, combined with possible financial stability risks caused by very loose monetary policy. on the other, we have the risks to credibility caused by a phase of low inflation, which could engender the risk of a self - reinforcing deflationary spiral. given that the oil price slump – the main cause of the low inflation rates – is temporary and is also acting as a stimulus for the economy as a whole, i consider the former risks to be more pressing than the latter at present. ladies and gentlemen, the world would be a far simpler place for the eurosystem ’ s monetary policymakers if economic growth in the member states were stronger. when potential growth is low, a central bank will soon start to run out of options – interest rates cannot simply be lowered ad infinitum into negative territory. one important reason why monetary policymakers have been forced to take ever riskier action is the weak growth outlook for the euro area. according to estimates by the european commission, 1 the euro area ’ s potential growth over the medium term – in other words, over the next ten years – is a mere 1 %. and weak growth prospects mean not only a european commission ( 2013 ), “ the euro area ’ s growth prospects over the coming decade ”, quarterly report on the euro area 12 (