Faber new years reception dbag 2014 english

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Faber new years reception dbag 2014 english

  1. 1. Convenience translation from German into English New Year’s Reception 2014 Deutsche Börse Group 20 January 2014 Embargo: 20 Januar 2014, 7:15 pm CET Joachim Faber Chairman of the Supervisory Board Deutsche Börse AG, Frankfurt/Main Check against delivery
  2. 2. Minister of Finance, Minister-President, Mr Secretary of Sate, Members of Bundestag, Minister of State, Presidents of the European Central Bank and Bundesbank, Lord Mayor and Mayor, deputies, ladies and gentlemen, I would like to welcome you to the Annual Kickoff 2014 on behalf of the Deutsche Börse Group Supervisory Board. As you all know, the Chancellor is unfortunately unable to be here and speak to us tonight due to her skiing accident. On behalf of the company, I would like to send her our best wishes for a speedy recovery. And so we are delighted to have you here to speak this evening, Minister Schäuble, despite your most certainly very full diary. Germany has certainly become the economic driving force of Europe in recent years. The German Chambers of Industry and Commerce expect a new German export revenue record of €1.45 trillion this year. According to recent calculations by the Ifo Institute in Munich, the German current account surplus has returned to first place world-wide – and is still climbing. Germany has even generated a surplus in business with China for the first time since 1988. This puts our country among the leading economic nations of the world. This strength in our economy is not accidental– it is the result of clever economic policy reliable over decades , which you also influenced considerably, Minister Schäuble. For our location, this economic policy created favourable framework conditions:  a stable budgetary policy designed for consolidation,  the preservation of and support for our core markets in Europe,  committed promotion of technology,  a solid system of broad-based academic education and a unique system of vocational training – the dual system,  and the adherence and further expansion of the social market economy. Check against delivery 2
  3. 3. Against this background, I, and I think I am speaking on behalf of many people, would like to tell you: Stay on track – even if some of our continental and transatlantic neighbours would like to see us weaken! Ladies and gentlemen, our successful German industry needs a top-class capital market and top-class financial sector at its side to benefit permanently from these favourable conditions. . It is very clear to me that a plea for a stronger capital market in the seventh year after the outbreak of the financial crisis is not a popular one. I also understand that, as regards the continual discovery of past errors by capital market participants, the public first has repair and rehabilitation on its agenda – rather than advancement and support. But we should not allow ourselves to be dissuaded from developing the capital market structures we need in light of global competition.Other strong economic nations are doing this too. I am happy to reiterate at this point my absolute conviction that it is primarily regulated major stock exchange organisations, with their transparency criteria, principles of equal treatment and central clearing houses, that provide stability and control on the capital markets during times of crisis. We should not lose sight of the fact that the capital market is the lifeblood of every market economy, in that it provides a platform for those who have already successfully generated assets to give them back – to generate returns and provide financing for those who need equity and debt capital for good ideas and ambitious projects. Of course, every well-functioning capital market is open not only to investors focussed on the long term, but also to those providing short-term liquidity to the markets. But it is important to sustain the long-term investors on the capital market – and in so doing, also the long term-focussed real economy. Check against delivery 3
  4. 4. Unlike in many major economies of the world, domestic institutional investors in Germany have comparatively low capacity to offer on the German equity market. Insurance companies, as traditional institutional investors on the German market, are barely in a position any more to hold substantial equity positions, even for long-term investments, due to the rapid increase in risk capital requirements for equities. The percentage of the assets managed by insurance companies in the whole of Germany invested in equities at the end of 2012 was just three percent according to figures from the German Insurance Association (GDV). Traditional pension funds which play a major role in Anglo-American countries, but also in Switzerland, the Netherlands and Scandinavia, are scarcely to be found in Germany. In other words – we are leaving the opportunity to participate in the strongest development in the German real economy to the rest of Europe. Development of a long-term capital market culture which is also of use to the general public could be supported by stronger development of funded pension schemes. So there is also a chance in the realisation that, as a result of the lowinterest phase lasting several years, the traditional solutions of the insurance industry that have previously reduced both biometric and capital market risks for citizens will be reconsidered. We can only meet the challenges of the demographic shift through increased funding of our pension systems and increased use of the capital market. As major authorities, the two distinguished institutions in the financial centre Frankfurt, the Bundesbank and the ECB, make key contributions to the success of the German real economy and the manageability of the costs of the structural change for Europe. This division of labour has proved itself; the responsibility is immense. And it is set to become even greater this year with the new role of the ECB in financial supervision. Check against delivery 4
  5. 5. In terms of implementing sensible regulatory plans in the market, Deutsche Börse is also an important building block of the financial centre Frankfurt, in addition to the Bundesbank and the ECB – as well as a link between policymakers and the market. Deutsche Börse is committed to the stability, integrity and efficiency of our financial system,and could play an even greater role given the right regulatory conditions, for example in creating increased transparency for OTC derivatives. In conclusion, I will say that the challenges of the present may seem lesser here than in other countries. But the important thing to remember is that we live in a world of global competition – between locations, between different types of market economy and – very importantly – between regulatory regimes. The new economic order depends on competition following the same rules. This means that well-meant but unilaterally implemented initiatives may also have negative consequences for the wellbeing of the domestic economy and population. To risk domestic economic growth or funding opportunities is also to risk cutting off parts of the population from prosperity. The unacceptably high level of youth unemployment in some countries should serve as a cautionary example of this. We cannot allow this to happen in Germany. After all, no other country has demonstrated the advantages of a social market economy more convincingly than Germany – and for decades! On this note, I look to the future with confidence. This new year offers ideal conditions to become a very successful year in economic terms – and everyone in the country should stand to benefit from it. I wish all of you a year that brings back especially trust and order. And now it is my great honour to invite Minister of Finance Schäuble to the stage! Check against delivery 5

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