Washington D.C., October 12, 2008 — Chairman of the Management Board and of the Group Executive Committee of Deutsche Bank AG.

Good morning and welcome to the IIF's Annual Membership Meeting.

We are meeting at a time when the economic outlook is deteriorating due to the combination of financial market stress, weakened financial institutions, and cyclical factors. There are increasing indications that the U.S. economy is in recession, while prospects for the economies of both Europe and Japan are much weaker than was predicted just a few months ago. Charles Dallara and Hung Tran will outline the IIF's perspectives on the economy and capital markets in a few minutes.

I cannot recall a situation as complex as this one. Over the last year the financial markets have experienced widespread instability, dislocations, and a loss of confidence. Rebuilding confidence is essential. This requires both official concerted international actions and resolute efforts by financial firms themselves.

Permit me to start by highlighting private sector aspects and then move to actions by the public sector. At the outset, it is useful to recognize that the industry is addressing many major issues more boldly than perhaps has, as yet, been widely recognized. Many firms have disposed of troubled assets, taken substantial write-downs and obtained new capital. The scale of these activities is enormous. Based on IIF calculations, firms have written down almost $600 billion and raised almost $500 billion of capital. For the banking system as a whole it is clear that more capital is needed and, as confidence revives we believe that the bulk of this will be supplied through private channels.

Importantly, companies are taking vigorous action to strengthen their operations in line with the recommendations for best practices that were developed by the IIF's Committee on Market Best Practices and relate specifically to risk and liquidity management, compensation, valuation, transparency and disclosure. Firms are now benchmarking against the Committee's proposals and we believe that as implementation moves ahead, so it will also contribute to a restoration of confidence. For example, we are seeing firms moving forward with the essential and detailed risk management best practices stated in the IIF report.

And, to take another example, the Committee took the lead with regard to compensation policies and developed essential principles to be implemented by firms that emphasized the importance of aligning incentives with long-term shareholder interests on a risk-adjusted basis and avoiding inappropriate severance pay. Today, these approaches are increasingly used by the industry to reform compensation practices. And, to support these efforts our members firms are now working with the IIF to develop benchmarks for reform.

The leaders of the financial industry recognize the depth of concerns that exist. Integrity and transparency must be the guideposts for our business and influence all aspects of the ways banks operate.

Ladies and gentlemen, the leaders of our industry do accept the responsibility to take whatever actions are needed to contribute to stability now and in the future. This commitment reflects the unanimous view of the IIF's Board of Directors, which has met here this week-end.

The exceptional difficulties that we are witnessing are due to many diverse considerations, including the risk management approaches taken by a number of firms. But, we need to understand the roles that the public sector must play. For example, quite recently we saw early signs of a revival of market stability and then, with the unexpected failure of Lehman Brothers, we saw a precipitous unraveling. We recognize the moral hazard concerns that influence decisions on specific cases, and we understand that at times it is appropriate that firms exit the markets. But, in this case the consequences were dramatic and they highlighted how interconnected the global financial system has become and how serious it is when a major investment firm fails. Indeed, we have all seen how intense market pressures on a number of firms could not be resolved on a case-by-case basis, but called for a response on an internationally coordinated scale that fully appreciated the systemic problems.

The structural strains that we are seeing in this first major global crisis of the highly inter-connected global financial system, which has evolved over the last quarter century, need to be comprehensively analyzed and approaches should be developed to overcome the weaknesses and strengthen the structure. The IIF's Board of Directors has decided that work in this area will be an important priority for the Institute.

Permit me to elaborate on the vital systemic issues that confront us today. We recognize the core strengths of market approaches, but now we see a market system that is stalled. The private sector is taking actions, as I have just noted, to work to restore the market system, but public policy actions to restart this vital engine of growth are necessary.

Market failures do arise, as we have seen with contagion when in the storm the good institutions are hit alongside others, and we have seen it in the interbank market, where firms have acted to protect themselves and amass liquidity and in the process the market broke down. When an extraordinary confluence of developments so substantially damages market stability and the prospects for prosperity, then determined official actions are essential. Systemic crises need systemic responses. To avoid arbitrage between national government approaches there has to be internationally coordinated, consistent approaches that produce a level playing field.

To be sure, major official actions have been taken. Central banks have made extraordinary efforts to provide liquidity to secure the functioning of the markets. Some governments have taken bold decisions to both inject capital and remove troubled assets from banking systems. And, we welcome the commitment expressed by the G-7 finance ministers here in Washington to take all necessary actions to restore stability.

In addition, we welcome the recent statements by the IASB, FASB and the SEC with regard to fair value accounting of assets in illiquid markets, and the announcing of an immediate review of differences between IFRS and U.S. GAAP in respect of how assets can be transferred from one category to another.

But, let me note that the IIF has been calling for a review of key aspects of fair value accounting by the standard setters and the authorities for many months. Back in April, we called for dialogue on this front and we highlighted the problems when we released the Interim report of our Committee on Market Best Practices at that time. We believe it is essential that there now be an immediate high-level dialogue among stakeholders to consider the issues of fair value accounting in the global arena.

Against the backdrop of the market turmoil, there are mounting calls for more regulation. Gaps and weaknesses are apparent in a number of regulatory areas, such as U.S. mortgage lending, and we agree that some new modalities for supervision of large, complex international institutions may be needed. I want to stress, however, that the focus needs to be on increasing the efficiency of supervision and enhancing international coordination and consistency. In this regard we believe consideration should be given to establishing a global regulatory coordinating body.

In conclusion, as we look ahead we see the importance of establishing a Market Monitoring Group involving leaders from private finance to detect critical vulnerabilities in the financial system at an early stage. This too will contribute to building a more resilient system.

The financial services industry is committed to play its full part to contribute to building a more resilient system.

Now, let me hand over to Bill Rhodes. Thank you.

Mr. William Rhodes

Good afternoon. First, let me echo Dr. Ackermann's comments on the roles that the private sector recognizes it must play to contribute to a strengthening of the financial system and the stabilization of financial markets.

Let me turn to critical developments in emerging markets. For a time there was a lot of talk about "decoupling,' which I always thought was a myth, and indeed it has become increasingly apparent that all economies are more interdependent than ever. And, emerging market economies are playing a more important role in global economic developments than ever. Many of these countries have instituted key reforms and pursued prudent macro-economic policies that have made them much more resilient than in the past and we believe that many of them are positioned to weather the storms. The strength of the economies of China, India and Brazil today, as well as a range of other emerging market economies, lend support to the global economy at a time when the leading industrial economies are slowing.

We have also seen in recent years the growth of increasingly strong, well capitalized, well managed and profitable financial services firms in emerging markets. These are also making an important contribution to the resilience of their economies at a time when important challenges of course exist.

However, this certainly is not a time for complacency by leaders of the public and private sectors in emerging markets. Policies in a number of countries will need reinforcement, especially where credit growth has been strong and fiscal or external imbalances have been substantial.

Indeed, actions at the national level can and should be strongly supported, where appropriate, by the International Monetary Fund, which should establish a contingency funding facility for this purpose. The IMF should, as well, facilitate the expansion of currency swap arrangements, which are now available to mature economies, to include emerging markets.

More generally, just as the IIF has strengthened the roles of emerging market institutions within the Institute and is creating an Emerging Markets Advisory Council, so the IMF must assign greater priority to strengthening its approaches to find better ways to work with emerging markets authorities, especially at a time of stress.

Private financial firms need to take full note of the weaknesses that the turmoil has exposed in European and American institutions and move forward to benchmark their own operations against the best practices recommendations that are contained in our IIF committee's recent report.

Later this afternoon we will be holding a meeting of the Members of the Group of Trustees of the Principles for Stable Capital Flows and Fair Debt Restructuring in Emerging Markets. These Principles were endorsed by the Group of 20 about four years ago and the Trustees are co-chaired by Jean-Claude Trichet, Henrique de Campos Meirelles and Toyoo Gyohten.

Today, given the strains that are also impacting emerging markets we are indeed fortunate to have these Principles in place. The application of the Principles by emerging market authorities are especially important - robust investor relations approaches, increased transparency and strengthened capital markets - fortify these economies and secure investor confidence. There has been a lot of progress over the last four years, but further progress is required as we enter a period of global downturn.

It is not surprising given the credit conditions that we have been witnessing and the slowing of global economic activity that there is also a visible slowing of net private capital flows to emerging markets. These flows reached an all-time record of over $890 billion last year. Flows held up quite well earlier this year, but for the year as a whole the IIF is now estimating a volume of about $620 billion and for 2009 the level is likely to fall further to a forecast approximately $560 billion. These are still quite important levels and reflect the underlying improvements in the health, policies and structures of many of these economies. Contributing to the overall decline in flows, quite naturally, is an anticipated substantial softening of commercial bank flows. These are especially difficult to forecast given the turmoil that we currently see in financial markets.

I have warned for a long time of serious looming difficulties in the global economy, starting at the IMF and World Bank annual meetings in Singapore two years ago. This is the most serious crisis in my 50 years in banking. Neither the debt crisis of the 1980s, nor the Asian crisis of the 1990s, saw such an erosion of market confidence as we are now experiencing.

Leadership, policy coordination, confidence building - these are crucial today. In the many meetings here in Washington in recent days, involving leaders from the public and the private sectors, from mature economies and emerging markets, there has been a constructive tone and recognition that detailed actions of the kind that Dr. Ackermann just highlighted, must be implemented with urgency by all parties.

Thank you.