andreas dombret : the german real estate market – cause for concern? speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, to haus & grund deutschland, berlin, 28 january 2015. * 1. * * introduction dear president kornemann, ladies and gentlemen it ’ s a great pleasure for me to speak to you today. i gladly accepted your invitation to berlin given the important influence that you – along with the german tenants ’ association “ deutscher mieterbund ” – have on the german real estate market. this is the first time i have taken part in your panel discussion, although i did once address the annual meeting of haus & grund in frankfurt at the invitation of mr conzelmann. i am therefore pleased to have this opportunity to explain the bundesbank ’ s perspective on the german real estate market. let us begin by taking a look at the economic situation in general – after all, economic conditions impact strongly on the real estate markets. 2. german economy in good shape the german economic situation is not as bad as some might think. on the contrary, the german economy remains in good shape. enterprises in germany have their costs under control, their debt is not particularly high, and they have an attractive range of products to offer the global markets. moreover, german economic activity is supported by consumption. unemployment is low, households are not burdened by excessive debt and real wages are rising appreciably owing to low inflation. in our december forecast we expect germany ’ s real gross domestic product to rise by 1. 0 % this year and 1. 6 % next year. however, the price of oil has fallen sharply since we prepared that forecast. if oil prices persist at their current low levels, economic growth could prove to be markedly higher this year and next, since the low price of oil has the effect of a small stimulus package. at the same time, we have for quite a while now been witnessing very low inflation rates, both in germany and throughout the euro area. and we can expect them to continue for some time to come. this undoubtedly poses a serious challenge for monetary policymakers. after all, we seek to achieve for the euro area inflation rates of below but close to 2 % over the medium term. to help us move closer to this target, the ecb governing council last thursday adopted a programme for the purchase of government bonds. as you know, the bundesbank takes a critical

speaking for the euro area, it would under no circumstances replace cash, but rather supplement it. a cbdc would expand the existing choice of payment methods. it could contribute to financial inclusion and ensure that less digitally savvy groups of the population also have access to digital payments. in addition, depending on the design choices, it could offer the opportunity to exploit technical innovations like dlt and thus enable, for example, payments embedded into programmable applications. in europe, when it comes to cbdc we aim to be “ ahead of the curve ” as ecb president christine lagarde put it, 12 while, at the same time, taking the utmost care to evaluate the design options for a digital euro. its development is a balancing act between two key risks. the first risk is that being too ambitious could lead to a crowding out of private payment solutions and a potential disintermediation of the banking sector. the second is the risk of creating an unattractive product that would not be accepted by consumers and enterprises. in october 2021, the ecb launched what it refers to as the investigation phase of the project. this is designed to ensure that the eurosystem stands ready to offer a functioning digital euro, should the decision be made to introduce it. until then, we will carefully investigate the risks, the 5 / 7 bis central bankers'speeches functional and technical design options, monetary policy independencies as well as financial stability implications. last but not least, we are holding lively discussions with all relevant stakeholders to identify key features that would add value for the potential users of a digital euro. the primary goal is to maintain the accessibility of central bank money in a digitalised economy. to fulfil this function, the digital euro must be accepted throughout the european union and adopted by its citizens. we are therefore fostering a dialogue with european businesses and citizens. the ebc recently published the findings of the responses by focus groups. 13 these give us additional insights on the payment needs of consumers and merchants and specific use cases of a potential digital euro. most importantly, participants in the focus groups preferred payment methods with paneuropean reach, speed, high convenience and universal acceptance in physical shops and online. in addition, privacy protection is of high importance. participants also valued the possibility of instant and contactless person - to - person payments. here, brazil ’ s instant payment system pix can serve as an example, showing that consumers have a demand for such services