cannot permit its chosen monetary policy stance not to be transmitted to the real economy. the parallel is that the first programme designed in the crisis in 2008 focused on the turmoil in the money market that at the time was dysfunctional and prevented a proper transmission of the chosen monetary policy stance to the financial system and the real economy. the second alesina and perotti ( 1997 ). programme, set up this year, focused on the turmoil in the sovereign bond market. this market is of significant importance in the transmission of monetary policy because interest rates on government paper are important reference rates, and because government paper is widely used as collateral and represents an important asset on balance sheets of financial institutions. reflecting on the decisions taken in the crisis so far and the challenges in the decade ahead, i would like to share with you some reflexions on three issues that are in my view of great importance for public authorities, particularly central bankers. first, the issue of uncertainty. second, the issue of crisis prevention. and third, the issue of the relationship between standard and non - standard measures taken by central banks. it seems to me that these three issues could very well characterise the next decade. ( i ) uncertainty first, uncertainty. today, central bankers have to take decisions in an environment marked by a degree of uncertainty in the economic and financial sphere that seems to me largely unprecedented. this uncertainty does not have a single cause. rather, it is the outcome of a combination of factors. the acceleration of major advances in science and technology ( not only information technology ), the ensuing structural transformations of our economies, the ever - growing complexity of global finance and the overall process of globalisation are itself creating a multidimensional acceleration of change. these phenomena contribute not only to a wider degree of uncertainty in underlying probability distributions, including fat tails. they also entail a much more significant element of knightian uncertainty – that is, the type of uncertainty in which there is no underlying probability distribution. the inherent and multidimensional phenomenon of uncertainty represents an additional difficulty for all economic agents. and it is undoubtedly a major challenge for public decisionmakers and particularly for central banks. as decision - makers in such demanding circumstances, i would stress several attitudes that seem to me more important than in the past : first, the need to be humble – to have a greater degree of humility in the face of facts that are not only surprising or “ abnormal ” but sometimes close to incredible. several times in the past three years

andreas dombret : current challenges for the european economy and international trade speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the german chamber of commerce, beijing, 25 may 2017. * * * 1 introduction ladies and gentlemen, probably all of you know that the chinese name for germany is “ deguo ", meaning “ land of virtue ". therefore, we can safely say that trade relations between china and germany were born under a lucky star. however, there are some clouds on the horizon casting a shadow on the future of international trade. without any doubt, this proposition needs further explanation. thus, i will begin my statement today by briefing you on the economic situation in the euro area. afterwards, i wish to present you the most important developments affecting the future of international trade – not only between germany and china, but more generally the future of the international trading system as a whole. namely, i will talk about the rise of protectionism in a number of large economies. by the way, it is reassuring that china has so far pledged to maintain a stance that promotes free trade, as it did at the world economic forum in davos, and is even looking for ways to expand it. but i do not want to speak primarily about the policies of governments, but about what each of us ‒ including central banks and international companies ‒ can do to steer the debate on trade away from harmful protectionism. 2 economic situation in the euro area 2. 1 positive economic outlook for the euro area but first, let me look at the general economic outlook for the euro area and consider the factors influencing future economic growth in europe. since the financial crisis, the pace of recovery in the euro area has been slower than in the united states, not to mention fast - growing emerging economies like china. lately, however, the economic recovery in the euro area has become increasingly broad and robust. for the euro area, just in the last few weeks the economic development has been slightly on the upside. the concrete data as calculated by the ecb staff shows that for the euro area, we are looking at sound gdp growth of 0. 5 % for the first quarter of 2017. at the same time, inflation for april 2017 stood close to the ecb target at 1. 9 %. unemployment in march was at 9. 5 %, down from its peak of 12 % in 2013. on the whole, the euro area economy is looking increasingly healthy and is