• the growth perspectives are directly related to the ecb ’ s mandate, which has price stability as a prime goal. the ecb – and many other central banks – define price stability as an inflation rate of below, but close to, 2 %. for 2015 our inflation forecast for the euro area is 0. 1 %, for 2016 it is 1. 1 %. so we will clearly miss our target. a main cause for this is the dramatic fall in the price of oil and raw materials, which central banks clearly cannot influence. but core inflation rates are also clearly below our target. it is obvious that under such a constellation we need stronger economic growth, which should help reduce unemployment and bring us closer to bis central bankers ’ speeches our goal of price stability. ecb is using the monetary policy instruments available – but it is quite obvious that in the current macroeconomic situation additional sets of instruments are necessary. these include structural measures – and here we are at the heart of the conference topic : competitiveness. but let us not forget that economic growth depends not only on the supply side, but also on the demand side and the institutional settings of an economy. • with respect to the uncertainties regarding the future of emu and the eu, the severe crisis we experienced has reminded policymakers of the pitfalls of an incomplete monetary union. president belka already mentioned the “ five presidents ’ report ”, which highlights four pillars : an economic union that promotes convergence and social cohesion, a financial union that integrates banking and capital market regulation, a fiscal union that supports the soundness of public finances and a political union that strengthens democratic accountability and legitimacy. • suddenly many good ideas are on the table to push the european integration process further. but these different approaches will need to be developed in more detail and will have to pass the reality check. in this crucial moment with discussions still ongoing, it is up to research to come up with feasible approaches. • the oenb, for example, hosted another conference just a couple of weeks ago with the aim of stimulating academic debate on ways to proceed with integration. throughout the event, which was entitled “ toward a genuine economic and monetary union, ” a broad consensus emerged about the need for a fiscal and economic policy framework that combines risk reduction and risk sharing. in other words : a genuine emu needs more discipline and solidarity. • and here i am coming back to today ’ s conference topic – “ boosting eu competitiveness. ” i

u. s. productivity growth and the decline in what economists call home bias. in brief, home bias is the parochial tendency of persons, though faced with comparable or superior foreign opportunities, to invest domestic savings in the home country. the decline in home bias is reflected in savers increasingly reaching across national borders to invest in foreign assets. the rise in u. s. productivity growth attracted much of those savings toward investments in the united states. the greater rates of productivity growth in the united states, compared with still - subdued rates abroad, have apparently engendered corresponding differences in risk - adjusted expected rates of return and hence in the demand for u. s. - based assets. home bias implies that lower risk compensation is required for geographically proximate investment opportunities ; when investors are familiar with the environment, they perceive less risk than they do for objectively comparable investment opportunities in far distant, less familiar environments. home bias was very much in evidence for a half century following world war ii. domestic saving was directed predominantly toward domestic investment. because the difference between a nation's domestic saving and domestic investment is the near - algebraic equivalent of that nation's current account balance, external imbalances were small. 1 national income accounting establishes that the gap between domestic saving and domestic investment is equivalent to net foreign saving ; net foreign saving is a close approximation of the current account balance. however, starting in the 1990s, home bias began to decline discernibly, the consequence of a dismantling of restrictions on capital flows and the advance of information and communication technologies that has effectively shrunk the time and distance that separate markets around the world. the vast improvements in these technologies have broadened investors'vision to the point that foreign investment appears less risky than it did in earlier times. accordingly, the weighted correlation between national saving rates and domestic investment rates for countries representing four - fifths of world gross domestic product ( gdp ) declined from a coefficient of around 0. 97 in 1992, where it had hovered since 1970, to an estimated low of 0. 68 last year. 2 to be sure, international trade has been expanding as a share of world gdp since the end of world war ii. yet, through the mid - 1990s, the expansion was largely a grossing up of individual countries'exports and imports. only in the past decade has expanding trade been associated with the emergence of ever - larger u. s. trade and current account deficits, matched by a corresponding widening of the aggregate external surplus