of the australian dollar. i do not want to make too much out of these arguments, other than to point out that some clouds do have silver linings. 5. the international economy when we think of the international economy, or its leading member – the us economy – we tend to remember that there has been a reasonably pronounced business cycle over recent decades. recessions occurred in the mid seventies, the early eighties and the early nineties. a lot of people think in terms of a relatively regular cycle, and hence think we are due for another us and world recession now. we cannot summarily dismiss this simple approach, and i find it hard to argue against the view that economies contain some unavoidable element of cyclicality in their path of development. the issues are : does a cycle necessarily involve a recession, and are there characteristics of the current cycle that make it different to its predecessors? i think these can be answered together. the current international cycle is different to its predecessors in one extremely important respect – the expansion phase did not culminate in an excessive rise in inflation. in fact, the rise in inflation was quite modest. this had two important consequences. first, because the rise in inflation was small, interest rates did not need to rise by very much during the relatively short period that they had to perform their anti - inflationary task. ( table 1 looks at the peak in inflation and interest rates at the end of various expansions. ) second, monetary policy could be eased much earlier in the slowing phase of the cycle than in the past. thus, to the extent that the cycle is the result of changes in monetary conditions and monetary policy, it should unambiguously be more muted on this occasion. similarly, to the extent that major downturns are the result of financial fragility, the situation should be better on this occasion as financial intermediaries in virtually all western countries are in much sounder shape than a decade ago. thus, in the areas dear to a central banker ’ s heart – monetary and financial stability – the situation is appreciably better on this occasion than earlier ones. table 1 : inflation and interest rates oecd inflation ( year - ended ) g3 nominal policy interest rate 1970s peak 14. 8 10. 6 1980s peak 13. 1 14. 1 early 1990s peak 5. 7 8. 4 3. 2 5. 8 2000 peak ( a ) ( a ) excluding japan it would be very reassuring if this

carl - ludwig thiele : rmb initiative – one year after start of clearing speech by mr carl - ludwig thiele, member of the executive board of the deutsche bundesbank, at the european - chinese banking day during the 18th euro finance week, frankfurt am main, 16 november 2015. * * * ladies and gentlemen i am delighted to be speaking about such an interesting topic at this year ’ s europeanchinese banking day. at last year ’ s china day, we celebrated the first rmb transactions processed by the rmb clearing bank in frankfurt. so how do things stand now, one year on, with regard to the development of the rmb and the clearing of rmb transactions? development of the rmb hub in frankfurt china has been experiencing an enormous economic upturn since the end of the 1970s, and has now become the second - largest economy in the world. in just one generation, therefore, china has made the quantum leap from donkey carts to high - speed transrapid trains. the importance of the chinese economy to the world economy is growing visibly. six years ago, its share in global gross domestic product was roughly 9 % ; this year, it looks set to hit 14 %. given the ever growing importance of the real economy, the chinese government has for some years now been pursuing a policy of cautiously opening up the financial market and is endeavouring to gradually internationalise the rmb. even though the us dollar is still the most widely used currency for trade with china, the use of the rmb as a currency of account has gained significant ground in the past few years. in trade finance, the chinese currency has surpassed the euro and now occupies second place, directly after the us dollar. measured in terms of transaction values, the rmb edged up to fourth place in august in the international payment transactions ranking. according to data from swift, more than 1, 700 banks worldwide ( from a total of just over 10, 000 participants in the swift network ) clear payments in rmb. in the past, the chinese government strengthened the rmb offshore markets, giving importers outside china a means of paying in rmb. for the political leaders, this was part of the long - term strategy to open up the markets with greater convertibility of rmb while retaining the ability to exercise control. this is because clearing in the rmb offshore markets requires the appointment of a ( chinese ) rmb clearing bank. as part of this strategy, the chinese central bank