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Bundeskanzler Werner Faymann: Rede bei der Volkswirtschaftlichen Tagung der Österreichischen Nationalbank

OeNB Conference: Central Banking after the Crisis

Wien (OTS) - Good Morning, Ladies and Gentlemen,

"Central Banking after the Crisis" - well, I`d be glad if I could talk about "Politics after the Crisis". But this crisis has many chapters.
While the clean-up efforts are still underway, we have to lay the groundwork for a new economic recovery. And to build sound foundations, we need to learn the right lessons from the crisis.

In my view, one of the main lessons to be learned is that belief in the super-power of the markets is a thing of the past - as is the belief in the super-power of the state. A wise balance of market and politics is the best strategy against future crises and for a sustainable recovery supporting full employment.
This balance is decisive to handling today`s three major political challenges: firstly, regulation of the financial markets; secondly, budget consolidation that is socially fair; and thirdly, a new growth strategy to promote full employment.

Fair financial markets

Regulation of the financial markets is more than overdue. Intransparent financial products were responsible for the crisis. This must never happen again. But, new financial markets are also important from a democratic policy point of view. If we do not succeed in getting down to the root of the problem that led to this crisis we will lose citizen`s trust. And this will de-stabilise democracy and markets. Fair investors want fair financial markets. Let me quote Jean-Claude Juncker, the President of the Eurogroup, who said that serious investors preferred regulated transparent markets while speculators preferred the Wild West. Therefore we require:
1) The introduction of a banking contribution and a financial transaction tax
2) The establishment of an EU rating agency
3) More rights for the European financial supervision
4) Stricter regulation of securities trading and bans on speculation 5) Legal regulations for manager bonuses
6) Stricter controls for hedge funds
7) Improved consumer protection in the field of financial products 8) Banking insolvency laws

A reform based on these principles will enable us to re-establish the balance between financial markets and the real economy. In the spirit of establishing this new balance, the financial sector will have to make its contribution. Because fairness in line with social requirements means fairness in line with market requirements. Budget consolidation with a sense of social proportion is also essential for the many small and medium-sized enterprises that depend on their customers` purchasing power. Reducing this purchasing power by higher mass taxation would mean reducing their sales.
And by making a fair contribution banks will be able to improve their image that has suffered as a consequence of this crisis. Taxpayers have taken major risks under the banking bail out and therefore we want the banks to contribute their fair share.

New growth for new jobs

We need money for policies to lead us out of this crisis. We need socially-balanced, just and fair government incomes to generate the necessary funds. This is why the areas of research and education will be less strongly affected by the tough cost-cutting programmes we will have to implement over the next few years. The best educational system for our children and a future-oriented research strategy will certainly cost money. But thinking that we could do without will cost much, much more.
I was in China just a week ago and could see for myself with how much effort Chinese industry shifts their business from the assembly lines to the labs. Under the old neo-liberal approach, the response to this global competition would have been: down with social standards, down with wages and up with weekly working hours. An approach that would only increase poverty and threaten the middle classes.
Austria and Europe therefore have to combine their traditional values with new ones. One of these traditional values is the welfare state our parents fought so hard for. And the Americans are increasingly using it as an example - as we`ve seen in Barrack Obama`s heath care reform. Today, this welfare state has an important role to play in fighting poverty. Poverty, which is no longer automatically caused by unemployment in Europe - where twelve per cent of employees earn so little that they live below the poverty line. That`s 40 million out of 320 million employees. And to fight poverty we require new and qualified jobs. And we will only be able to sustain the welfare state by promoting education, research and development.
One of Europe`s priorities is climate protection. We must support technologies in the field of climate protection. Because they will enable us to compete by know-how - and not by wage dumping, generous tax incentives to large business groups or by cut backs in the welfare state.

A new economic and social union

This brings me from the lessons learned from the crisis to the challenges ahead. One of these lessons is that Europe needs to improve coordination and respond faster to any crisis.
It is clear that sound budgets and a stable currency are decisive for a stable European economy. But if all European countries were to cut costs at the same time in all the wrong places this would only lead us into the next recession - and reduce our perspectives for the future. What we need now is joint initiatives to be launched all around Europe. But we also need to better coordinate our social growth strategies: to create new highly qualified jobs and ensure that Europe will become an economic and social union - in the spirit of this new balance between people and markets.

Ladies and gentlemen, I thank you very much for the opportunity to address you today and wish you every success for your conference.

Rückfragen & Kontakt:

Pressesprecher des Bundeskanzlers
Mag. Leo Szemeliker
Tel.: (01) 531 15 - 2090, 0664/282 25 00