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

jens weidmann : prospects for the economy speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the jahresempfang der wirtschaft, mainz, 7 february 2017. * * * 1 welcome mr friese dr bennecker dr gunster ladies and gentlemen many thanks for your kind welcome. seeing as we are well into the fifth season of the year, as the carnival period is known here in this part of germany, and unmistakably so when i see the festive decorations festooning this venue, one or two of you might be expecting a traditional, witty carnival speech, or at least be hoping, deep down, to hear something equally entertaining. well, i ’ ll have to disappoint you on that score, i ’ m afraid. central bankers are widely regarded as somewhat dreary speakers, especially so because of the dry topics they drone on about. they ramble on about monetary policy transmission channels, financial pro - cyclicality and macroprudential instruments. worse still, they love to use acronyms like pspp, tltro or ssm – terms which, for the uninitiated, often mingle to produce an indigestible alphabet soup. and wasn ’ t it former bank of england governor mervyn king who once posited that " few are braver than those who choose to listen to a central banker "? it ’ s all the more cheering, then, to see that there are so many brave souls in and around mainz... perhaps that ’ s because central banks have been credited with a political role that extends far beyond the narrow field of monetary policy. after all, in the midst of the crisis, central banks were repeatedly described as the only institutions capable of taking action and had new tasks outside the remit of monetary policy thrust upon them. or maybe it ’ s also because the current monetary policy stance is directly affecting you, ladies and gentlemen, in one way or another. you will have felt the impact of the low - interest - rate policy at close quarters, no matter whether you are an entrepreneur, a taxpayer, a property buyer, or a saver or member of an occupational pension scheme whose concerns dr bennecker has already outlined. and the entrepreneurs among you, especially, will naturally also be wondering which way the economy will go in the foreseeable future and what