- performing loans are still unresolved in a number of countries, which means the risk situation differs strongly from one national banking system to the next. i will return to this particular point later in my statement today. while a recently published draft report by esther de lange at the european parliament does already address some of the criticism levelled at the commission proposal, that paper indicates that the proposed initial re - insurance phase starting in 2019 will still take place without any riskreduction measures whatsoever. that would be inacceptable in my view. my conclusion from this is that we should stick to the current system – harmonising the national deposit insurance schemes – as long as many outstanding issues remain unresolved. for all the progress that has been made towards deeper integration, european unity suffered something of a setback on 23 june this year. that was the day on which the uk electorate voted against the country ’ s continued membership of the european union. that brings us to the topic 1 / 5 bis central bankers'speeches of “ less europe ". i won ’ t wade into the political debate today, but focus instead on what brexit means for financial markets. five months on from the uk referendum, we can say that the european financial system has done a pretty good job overall of absorbing the outcome of the vote. apart from a bout of heightened financial market volatility, notable share price losses, particularly among bank stocks, and the sharp depreciation of sterling, the brexit vote did not unleash any turmoil in financial markets, nor, might i add, was there ever any risk of a financial crisis. there are two reasons for this. first, the good level of resilience that has now been achieved in the european financial system. second, and no less important, the response shown particularly by the bank of england. nonetheless, the long - run repercussions of the brexit vote will only really come into view when we get a better idea of the outcome of the forthcoming exit negotiations. the signals which the uk government is currently sending out would appear to suggest that a “ hard brexit ” might be in store – that is, the uk would leave not just the eu but also the european economic area. that would spell the end of the current eu passporting regime – an arrangement which presently enables financial institutions domiciled in the uk to offer their products and services across the entire european economic area. it also permits continental european institutions to

these topics in detail please let me emphasise how closely the subject of the new economy is linked to monetary policy. this applies not only to us monetary policy but also to the two pillar approach of the european central bank. regarding the first pillar - which is the reference value for money supply - the governing council of the ecb has pointed out that the trend growth of the economy could be enhanced by structural reforms on the labour and product markets. the european central bank would take such improvements into account in calculating the m3 reference value. at the same time, the second pillar of the monetary policy approach - that is the broadly based assessment of the outlook for price developments - would have to pay heed to traces of a new economy. however, it goes without saying that a conservative central banker cannot rely on hopes and expectations but only on reliable facts and established findings. to make it absolutely clear : my thoughts on some trace elements of a new economy in germany do not imply that i disregard the importance of the money supply for the medium - term price development in the euro area. schumpeter, the theory of economic development, ( 1911 ), transactions publishers, 1993, p. 223. schumpeter, loc. cit., p. 64. but now let me get back to the four topics i have just mentioned. with regard to the labour market and inflation it is initially striking that the development of inflation in germany over the last decade has been fairly similar to that in the united states. however, there was a certain time lag in germany. in the early 1990s, the german inflation rate was still around 5 % owing to tight capacity utilisation. since then it has fallen continuously. since 1995 the inflation rate has been well below 2 %. it is thus within a range that is consistent with price stability according to the ecb ’ s definition. in contrast to inflation, labour market trends in germany during the 1990s have been fundamentally different from those in the united states. whereas the us unemployment rate has continued to decline, the unemployment rate in germany has been rising significantly for a long time since the cyclical slump in 1992 - 93. and this has been accompanied by a continued decline in employment despite an active labour market policy and the creation of early retirement schemes. the german labour market is, if you like, a classic element of an “ old economy ”. it is only recently that the dent in growth caused by the asian crisis has been overcome, that an improvement can