. moreover, if expectations in futures markets are borne out, energy prices should be moving lower. in addition, fiscal stimulus is on the way. but the key to the strength and rapidity of the recovery will be the balance between the working off of excesses associated with new - economy forces that built up in 1999 and early 2000 and the renewal of investment as new - economy opportunities continue to accumulate. while a recovery along the lines of the consensus forecast is reasonable, i see some downside risks to that outlook. there are no signs yet that the economy is strengthening relative to its first - quarter performance and growth is likely to remain sluggish into the third quarter. in addition, it is unlikely that we will see a repeat of the exceptional performance from 1996 through mid - 2000 on the other side of the slowdown. first, the temporary demand and disinflation that accrued during the initial adjustment to an acceleration in productivity – and that contributed to the exceptional performance earlier – may now be behind us. second, we are unlikely to see a repeat of the unsustainable rise in equity prices or frenzied pace of investment, at least for a time. the events of the past year are likely to linger in the minds of many. vii. challenges facing monetary policy learning from experience is the key to good forecasting and good policymaking. movements from low to high ( or high to low ) productivity growth set off complex dynamics that typically dominate macroeconomic experience for a period. we have relatively few historical examples, so policymakers have had to learn as they confronted the most recent productivity acceleration. let me identify some of the lessons, or at least identify some of the questions, that we might be asking about the appropriate conduct of monetary policy. monetary policy can become an especially blunt instrument during a period of a productivity acceleration, at least once imbalances and vulnerabilities build, as they seemed to have. any attempt to slow growth in such an environment – necessary as it may be – can produce a discontinuous response after some point by triggering an abrupt unwinding of financial and other imbalances. monetary policy has to be alert to the possibility of such a discontinuous change and be prepared to reverse course, as we have done. some, including myself, may have over - weighted our concerns over resource utilization rates during the high - growth period but underestimated the dangers from growing imbalances in other areas. the productivity shock

, enterprises have started seeking alternatives to the traditional bank loan and, where possible, have increasingly turned to the capital market. the scale of capital market financing nonetheless remains low in germany – especially when compared to the united states or the united kingdom. all the same, i am confident that the cooperation between banks and enterprises will still be of great importance going forward. for smes, in particular, the relationship with their principal bank continues to play a vital role – not least because trust is built on past experience. a principal bank thus has an information advantage over another investor, which is highly likely to benefit enterprises. but besides market - based funding, other lenders such as insurers, other financial intermediaries or trade credits from other enterprises are also increasingly taking the place of bis central bankers ’ speeches traditional bank loans. the use of own funds has also risen, primarily among smes. in short, the funding options for german enterprises are becoming more varied. at this point, one might worry that this development will have a negative impact on banks ’ earnings, but i would like to put something into perspective here. diversification of funding sources can surely contribute to the stability and efficiency of the financial system – and that ultimately benefits the banks, too. there is still a great deal of potential in this respect in germany especially, but also other european countries, compared with the english - speaking world. for this reason, i take a thoroughly positive view of the increased importance of bonds, securitisations and borrowers ’ notes, even in the sme sector. it is particularly important, however, to pay attention to the quality of these instruments, especially in such a young market segment. thus, even sme bonds do not provide a real way out of the funding problems of weak enterprises, but instead are a suitable instrument for larger smes with high credit quality. 6. conclusion let me sum up by saying that banks and enterprises are closely interconnected. they play a crucial role in the functioning of our economy, both individually and together. yet to a great extent, banks and enterprises shape their relationship themselves : banks decide which enterprises to lend to at which conditions, and enterprises return this trust with their demand for loans. i am therefore firmly convinced that credit institutions and enterprises, working hand in hand, will still be able to overcome the future challenges of business life. even so, their relationship will certainly experience further change in the coming years and incorporate additional participants, mainly in the capital market. i