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Introduction
Ladies and gentlemen,
Thank you for the invitation. It is a true pleasure to be here at the Security Action for Europe (SICHER) and today at Goethe University. I always enjoy coming here because it is where excellent research meets informed political debate.
As you may know, the Bundesbank has a longstanding relationship with SICHER and with Goethe University in a broader sense. Through this close integration, a fruitful exchange between research and policy has emerged over the years, which is particularly valuable in challenging times like these.
This year’s conference focuses on the many challenges we face in a time of great uncertainty. Many commentators describe the era we live in as a time of «poly-crises,» where multiple crises occur simultaneously.
Geopolitical fault lines are shifting. Technological change is accelerating, and the impacts of climate change are becoming increasingly visible.
And the recent rise in oil and gas prices against the backdrop of conflicts in the Middle East reminds us of how quickly they can have geopolitical implications and test the resilience of our economies and institutions.
Today, I will focus on two causes of economic and financial instability: first, political uncertainty, especially regarding the energy transition. And second, external vulnerabilities, particularly those related to energy security and global trade.
The Role of Political Uncertainty
The current high level of uncertainty affects us all. Some of this uncertainty reflects the difficult compromises that governments and parliaments are facing today – between promoting economic growth, strengthening strategic autonomy, and promoting ecological sustainability.
These goals do not always align and could lead to sudden shifts in political priorities. This can impact the economic and financial situation and make assessing economic prospects more challenging. The connection between climate, macroeconomics, and the financial system is becoming clearer.
Let me illustrate this with some examples. The political shift after the 2024 election in the United States is a clear example of how quickly the political environment can change. President Trump’s second term brought about significant political changes, including tariffs and a shift in climate policy direction. The effects are felt worldwide.
And in Europe, the urgency and necessity of climate policy have become less clear as policymakers have shifted their focus to defense and economic competitiveness, bringing these issues to the forefront of the political agenda. This political pendulum affects businesses and consumers alike – and its effects can be far-reaching. Scientific studies show that political uncertainty can have measurable economic impacts. One recent study suggests that previous episodes of climate policy uncertainty in the United States may have reduced GDP by 0.5 percent and private investment by nearly 2 percent. Another study shows that climate policy uncertainties can affect venture capital financing for Cleantech startups.
We have also seen recent examples of how political uncertainty, particularly related to the green transition, can directly impact asset prices. One estimate suggests that the reversal of electric vehicle policies in the US and elsewhere reduced the book value of the global automotive industry by at least $65 billion last year. That is a significant amount, even in a trillion-dollar industry.
To give another example: Just last month, proposals to delay stricter CO2 regulations led to an initially surprising market reaction. This triggered a sharp decline in the stock prices of European cement manufacturers. The proposal was intended to support the industry, but investors fear that reducing CO2 emissions would harm the companies that had already invested in cleaner technologies.
These examples show how quickly political changes can lead to market uncertainty and a reassessment of asset prices. Yet another reason for central banks to continue to focus strongly on stability, solid data, and analysis.
The Importance of Reducing External Vulnerabilities
Furthermore, the renewed conflict in the Middle East is a new reminder that external shocks can pose serious risks to stability – if we are not prepared. The Covid-19 pandemic and Russia’s invasion of Ukraine have already served as a wake-up call for policymakers – here in Germany as well – about our strong dependence on global supply chains.
Germany’s dependence on foreign energy imports is particularly striking. Imports of fossil fuels still account for almost 70% of Germany’s total energy needs. For Europe, it is close to 60%. To reduce these vulnerabilities, Europe must focus on three aspects:
Increasing its own energy production in Europe
Enabling energy distribution in Europe
Diversifying external energy resources.
This is one of the areas where political goals reinforce each other and are not in conflict. Regions like Europe, which do not have large fossil energy sources, benefit from a renewable energy system because it is inherently more secure: it reduces dependence on imported oil and gas and strengthens economic resilience. Accelerated adoption of clean energy technologies can help increase our resilience to energy shocks and promote stable prices.
However, we must remain realistic: it will take years to significantly reduce dependence on energy imports. In fact, research by colleagues from the Federal Reserve suggests that Europe’s dependence on energy imports is likely to remain high. If we continue to deploy renewable energy at the pace of the last ten years, we would still need to import about 53% of our energy needs in 2033. Even with an accelerated transition process, we would still need to import 43% in 2033.
When transitioning to clean energy, it is also important to closely monitor energy costs. Here in Germany, industries are caught between high natural gas and electricity prices. After the start of the conflict in Ukraine, Germany managed to ensure gas supply. However, energy prices also play a role in addition to energy supply. Oil and gas prices are global prices. So, if global markets drive up oil and gas prices, prices will rise worldwide.
Resilience, however, is not limited to energy. It also depends on open and diverse trading partners and, in an increasingly digital world, on secure and reliable digital infrastructure. Looking at trade flows, the recent development of the politically closed and signed Mercosur agreement is currently undergoing the ratification process. Once in force, it will create one of the largest free trade zones in the world, encompassing around 700 million people, reducing tariffs, and strengthening supply chains.
The EU has also recently concluded negotiations on a comprehensive free trade agreement with India, one of the fastest-growing economies in the world. These developments deserve recognition. They show that Europe continues to advocate for openness and rule-based global trade, even in a time of increasing fragmentation. By expanding partnerships and deepening economic relations with key regions, the European Union is enhancing the resilience of its economy.
Furthermore, Europe is taking steps to strengthen its digital sovereignty. This is particularly important in light of the fact that the continent is still dependent on foreign suppliers for over 80% of its digital technologies, infrastructure, and services. Reducing dependencies requires stronger investments in European IT infrastructure so that Europe can maintain its ability to develop and provide the critical technologies that underpin modern economies.
In conclusion, I would like to remind you that times of increased uncertainty require stable institutions and close international cooperation. A good example is the Network for Greening the Financial System (NGFS), which I have had the honor of chairing. Today, it brings together nearly 150 central banks and supervisory authorities from around the world. The interest in our work remains strong, reflecting ongoing global engagement in addressing climate-related risks in the financial system. Our community continues to grow with new members and observers.
I know firsthand how valuable your research is for policymakers and supervisory authorities. It helps us better understand complex economic challenges and develop robust policy responses. I am confident that the discussions over the next two days will be both stimulating and fruitful. Therefore, the contribution of this conference to our shared effort is invaluable.
Thank you.
Footnotes:
1. Konstantinos Gavriilidis, Diego R. Kanzig, Ramya Raghavan, and James H. Stock, «The Macroeconomic Impacts of Climate Policy Uncertainty,» NBER Working Paper 34762 (2026).
2. Joelle Noailly, Laura Nowzohour, and Matthias van den Heuvel, «Does Environmental Policy Uncertainty Affect Investments in a Low-Carbon Economy?» NBER Working Paper 30361 (2022).
3. The waning enthusiasm for electric vehicles triggers a $65 billion damage to automakers.
4. European cement stocks decline as EU policy fears impact prices.
5. Own calculation based on International Energy Agency World Energy Balances (2025).
6. European Commission, EU-Mercosur Trade Agreement (2026).
7. Bertelsmann Stiftung, EuroStack – A European Alternative for Digital Sovereignty (2025). The political pendulum affects businesses and consumers alike – and its effects can be far-reaching. Scientific studies show that political uncertainty can have measurable economic impacts. A recent study indicates that in the United States, past episodes of climate policy uncertainty may have reduced GDP by 0.5% and private investment by nearly 2%.[1] Another study suggests that climate policy uncertainties can impair venture capital funding for Cleantech startups.[2]
We have also seen recent examples of how increasing political uncertainty related to the green transition can directly impact asset prices. One source estimates that the reversal of electric vehicle policies in the US and elsewhere reduced the book value of the global automotive industry by at least $65 billion last year.[3] This is a significant amount, even in a trillion-dollar industry.
To give another example: Just last month, proposals to delay stricter CO2 regulations led to an initially surprising market reaction. This triggered a sharp decline in the stock prices of European cement manufacturers.[4] The proposal was intended to support the industry, but investors feared that reducing CO2 emissions would harm the companies that had already invested in cleaner technologies.
These examples demonstrate how quickly political changes can lead to market uncertainty and a reevaluation of asset prices. This is all the more reason for central banks to continue to focus strongly on stability, solid data, and analysis.
Furthermore, the recent conflict in the Middle East serves as a new reminder that external shocks pose serious risks to stability if we are not prepared. The Covid-19 pandemic and Russia’s invasion of Ukraine have already served as wake-up calls for policymakers – even here in Germany – about our strong dependence on global supply chains.
One particular area of concern is Germany’s reliance on foreign energy imports. Imports of fossil fuels still account for nearly 70% of Germany’s total energy needs.[5] For Europe, it’s close to 60%. To reduce these vulnerabilities, Europe must focus on three aspects:
1. Increasing domestic energy production in Europe
2. Facilitating energy distribution in Europe
3. Diversifying external energy resources
This is an area where political goals can reinforce each other rather than contradict. Regions like Europe, which lack significant fossil energy sources, benefit from a renewable energy system because it inherently reduces dependence on imported oil and gas, strengthening economic resilience. Accelerating the adoption of clean energy technologies can help increase our resilience to energy shocks and promote stable prices.
However, it is important to remain realistic: It will take years to significantly reduce dependence on energy imports. Research from colleagues at the Federal Reserve suggests that Europe’s dependence on energy imports is likely to remain high. If we continue to deploy renewable energies at the current rate, we would still need to import about 53% of our energy needs in 2033. Even with an accelerated transition, we would still need to import 43% in 2033.
When transitioning to clean energy, it is also important to closely monitor energy costs. Here in Germany, industries are facing high natural gas and electricity prices. While Germany managed to secure gas supply after the start of the war in Ukraine, energy prices play a significant role alongside energy supply.
Resilience extends beyond energy and also depends on open and diverse trade partners and, in an increasingly digital world, secure and reliable digital infrastructure. Recent developments, such as the EU-Mercosur agreement, show that Europe continues to advocate for openness and rule-based global trade even in times of increasing fragmentation. By expanding partnerships and deepening economic relationships with key regions, the European Union strengthens the resilience of its economy.
Additionally, Europe is taking steps to enhance its digital sovereignty, recognizing the importance in reducing dependence on foreign suppliers for digital technologies, infrastructure, and services. Addressing these dependencies requires increased investment in EU infrastructure to ensure Europe’s ability to shape and provide essential technologies that underpin modern economies.
In conclusion, times of increased uncertainty require stable institutions and close international cooperation. The Network for Greening the Financial System (NGFS) is a prime example of this, which I have the honor to preside over. Today, it brings together nearly 150 central banks and regulatory authorities from around the world. The interest in our work remains strong and reflects ongoing global commitment to addressing climate-related risks in the financial system. Our community continues to grow with new members and observers.
I know firsthand how valuable your research is for policymakers and regulators. It helps us better understand complex economic challenges and develop robust policy responses. I am confident that the discussions over the next two days will be both stimulating and fruitful. Daher ist der Beitrag dieser Konferenz zu dieser gemeinsamen Anstrengung von unschätzbarem Wert. Vielen Dank für die Einladung und die Möglichkeit, bei diesem wichtigen Event teilzunehmen. Es ist eine Freude, an der Goethe-Universität zu sein und die Gelegenheit zu haben, über die aktuellen Herausforderungen und Unsicherheiten zu diskutieren, mit denen wir konfrontiert sind.
Die diesjährige Konferenz zielt darauf ab, die vielfältigen Herausforderungen anzugehen, mit denen wir in diesen unsicheren Zeiten konfrontiert sind. Diese Ära der «Polykrisen» bringt geopolitische Verschiebungen, beschleunigten technologischen Wandel und deutliche Auswirkungen des Klimawandels mit sich. Der jüngste Anstieg der Öl- und Gaspreise vor dem Hintergrund der Konflikte im Nahen Osten verdeutlicht die schnellen geopolitischen Auswirkungen, die unsere Volkswirtschaften und Institutionen auf die Probe stellen können.
In meiner Rede werde ich mich auf zwei Hauptursachen für wirtschaftliche und finanzielle Instabilität konzentrieren: politische Unsicherheit, insbesondere im Zusammenhang mit der Energiewende, und externe Schwachstellen, insbesondere im Bereich der Energiesicherheit und des Welthandels.
Die politische Unsicherheit, die wir derzeit erleben, spiegelt die schwierigen Entscheidungen wider, vor denen Regierungen und Parlamente stehen. Der Balanceakt zwischen Wirtschaftswachstum, strategischer Autonomie und ökologischer Nachhaltigkeit kann zu plötzlichen Verschiebungen der politischen Prioritäten führen. Diese Unsicherheit erschwert die Prognose wirtschaftlicher Entwicklungen und verdeutlicht den Zusammenhang zwischen Klima, Makroökonomie und Finanzsystem.
Beispiele wie der politische Umschwung in den Vereinigten Staaten nach den Wahlen 2024 und die Verschiebung der Klimapolitik in Europa zeigen, wie politische Entscheidungen die Wirtschaft und Finanzmärkte beeinflussen können. Studien haben gezeigt, dass klimapolitische Unsicherheit die Wirtschaftsleistung und Investitionen beeinträchtigen kann. Aktuelle Ereignisse wie die Umkehrung der Elektrofahrzeugpolitik und die Verzögerung von CO2-Vorschriften verdeutlichen, wie politische Unsicherheit sich auf Vermögenspreise auswirken kann.
Der erneute Konflikt im Nahen Osten erinnert uns an die Bedeutung der Reduzierung externer Schwachstellen. Globale Schocks wie die Covid-19-Pandemie und geopolitische Konflikte haben gezeigt, dass wir auf externe Risiken vorbereitet sein müssen. Die Abhängigkeit von ausländischen Energieimporten ist eine Herausforderung, mit der Deutschland und Europa konfrontiert sind.
Insgesamt ist es entscheidend, dass wir uns diesen Herausforderungen gemeinsam stellen und die Bedeutung von Stabilität, soliden Daten und fundierten Analysen betonen. Die Beiträge dieser Konferenz sind von unschätzbarem Wert für unsere gemeinsamen Anstrengungen, diese Herausforderungen zu bewältigen. Vielen Dank für Ihre Aufmerksamkeit. To reduce these vulnerabilities, Europe must focus on three aspects:
1. Increasing its own energy production in Europe
2. Facilitating energy distribution in Europe
3. Diversifying external sources of energy.
This is one area where political goals reinforce each other and are not contradictory. Regions like Europe, which do not have large fossil energy sources, benefit from a renewable energy system because it is inherently safer: it reduces dependence on imported oil and gas and strengthens economic resilience. The accelerated deployment of clean energy technologies can help increase our resilience to energy shocks and promote stable prices.
However, we must remain realistic: it will take years to significantly reduce the dependence on energy imports. In fact, research by colleagues at the Federal Reserve suggests that Europe’s dependence on energy imports is likely to remain high. If we continue to deploy renewable energies at the same rate as we have in the past decade, we would still need to import about 53% of our energy needs by 2033. Even assuming an accelerated transition process, we would still need to import 43% by 2033.
When transitioning to clean energy, it is also important to closely monitor energy costs. Here in Germany, industries are caught between high natural gas and electricity prices. After the start of the war in Ukraine, Germany managed to secure gas supply. However, in addition to energy supply, energy prices also play a role. Oil and gas prices are global prices. So, if global markets drive up oil and gas prices, prices will rise worldwide.
Resilience, however, does not stop at energy. It also depends on open and diverse trading partners and, in an increasingly digital world, on a secure and reliable digital infrastructure. Looking at trade flows, the recent development is a positive one – the politically closed and signed Mercosur agreement is currently going through the ratification process. Once in force, it will create one of the largest free trade zones in the world, covering around 700 million people, reducing tariffs, and strengthening supply chains.
The EU has also recently concluded negotiations for a comprehensive free trade agreement with India, one of the fastest-growing economies in the world. These developments deserve recognition. They show that Europe continues to advocate for openness and a rules-based world trade regime even in a time of increasing fragmentation. By expanding partnerships and deepening economic relations with key regions, the European Union strengthens the resilience of its economy.
Furthermore, Europe is taking steps to strengthen its digital sovereignty. This is particularly important in light of the fact that the country is still dependent on foreign suppliers for more than 80% of its digital technologies, infrastructure, and services. Reducing dependencies requires stronger investments in Europe’s IT infrastructure so that Europe can maintain its ability to shape and provide the critical technologies that underpin modern economies.
In conclusion, I would like to emphasize that times of increased uncertainty require stable institutions and close international cooperation. A good example is the Network for Greening the Financial System (NGFS), which I have had the honor of chairing. Today, it brings together nearly 150 central banks and supervisory authorities from around the world. Interest in our work remains strong and reflects the ongoing global commitment to addressing climate-related risks in the financial system. And indeed, our community continues to grow with new members and observers.
I know firsthand how valuable your research is for policymakers and supervisors. It helps us better understand complex economic challenges and develop robust policy responses. I am confident that the discussions over the next two days will be both stimulating and fruitful. Therefore, the contribution of this conference to this joint effort is invaluable.
Thank you. Can you please rewrite this sentence? Please rewrite the following sentence:
«The cat chased the mouse around the house.»
«The mouse was chased by the cat throughout the house.»
QUELLEN
