Claudia Buch: Risks and resilience in the financial system - a German perspective

Speech by Prof Claudia Buch, Vice-President of the Deutsche Bundesbank, at the Institute of International and European Affairs (IIEA), Dublin, 30 January 2020.

Central bank speech  | 
03 February 2020
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The future of global integration and trade has been the focus of international policy discussions at least since 2017 when trade tensions intensified. Public discussions on the consequences of integration on growth and income equality, and on the effects of the global financial crisis, have started to manifest themselves in policy actions. Tariffs have been raised and remain at an elevated level despite the recent trade agreements between China and the US. In 2019, global trade growth decelerated to about 1%, according to IMF estimates. This follows a slowdown of global trade in goods and services from annual averages of more than 8% in the years leading up to the financial crisis (2003-2007) to about 3% since then.

This matters for the German economy, as it is highly integrated into global trade: exports of goods and services in the last decade have, on average, reached shares of about 46% of GDP, the import share has been 40%. Similarly, Germany has strong financial linkages with the rest of the world - German net foreign assets stood at roughly 62% of GDP at the end of 2018. A large share of these linkages is with other European countries, including Ireland: In 2018, Ireland was ranked among the top 25 of Germany's trade partners in merchandise trade: it ranked 24th for exports and 20th for imports. The stock of German assets in Ireland amounts to approximately 3% of all German investments abroad, while close to 4% of Germany's foreign liabilities are towards Ireland. These numbers are down from about 6% to 8% prior to the global financial crisis.