The document is a transcript of a speech given by Joachim Faber, Chairman of the Supervisory Board of Deutsche Börse AG, at the company's New Year's Reception in 2014. In the summary, Faber praises Germany's strong economy and attributes it to stable economic policies over decades. He argues that Germany needs a strong capital market and financial sector to support its successful industries. Faber also advocates for reforms to develop capital markets and encourage long-term investment to benefit both the economy and citizens. In conclusion, he expresses confidence in Germany's economic future and introduces the guest speaker, Finance Minister Wolfgang Schäuble.

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
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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.
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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.
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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.
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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!
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