The Bundesbank believes that the European Commission's most recent actions weaken Europe's fiscal rules. Owing to numerous exceptions, frequent changes and the increasing complexity of the rules, it is now "barely possible" to apply them consistently, the Bundesbank argues in the current edition of its Monthly Report. It sees the weakening of the binding effect of the rules and of the incentives to ensure sound public finances in the euro area as a cause for concern.
The Bundesbank supports the European Commission's initiative to build a European Capital Markets Union (CMU). In a statement the Bundesbank said that closer integration of the European Union's capital markets could make the European financial system both more growth-friendly and shock-resistant.
The Bundesbank is expecting continued distinct economic growth in the coming months. According to the current issue of the Monthly Report, private consumption is the key driver of this growth. In the industrial sector, however, the Bundesbank's economists expect a more sluggish economic development.
Alexandre Lamfalussy, one of the founding fathers of the euro, passed away on 9 May at the age of 86. Bundesbank President Jens Weidmann praised him as one of the important pioneers of European monetary union.
The International Monetary Fund (IMF) expects Germany’s upswing to continue in 2015, according to the preliminary conclusions of the “Article IV consultations” for Germany. Growth is being supported mainly by private consumption, according to the Fund. The IMF’s economists recommend that Germany use the favourable cyclical position in order to accomplish important policy objectives.
Six months on from the launch of Europe´s Single Supervisory Mechanism (SSM), Bundesbank Executive Board member Andreas Dombret is upbeat about what has been accomplished so far. "European banking supervision makes it possible for banks throughout the euro area to be supervised according to the same high standards," he said at a conference in Frankfurt am Main, adding that harmonising national supervisory practices for small banks as well remains a challenge.
Bundesbank President Jens Weidmann has warned of the risks and side-effects of the Eurosystem's extremely expansionary monetary policy. Among other things, it significantly weakened the disciplining of fiscal policy by the financial markets, he said at an event in Essen.
A study conducted by the Bundesbank's Research Centre shows that Germany's expansionary fiscal policy had a stimulating effect during the crisis. However, its impact on other countries within the euro area was marginal.
The Bundesbank believes that there is some scope for lowering the contribution rate to the unemployment insurance scheme. It notably proposes using taxpayers' money to finance the Federal Employment Agency's non-insurance-related benefits in future. By contrast, the Bundesbank's economists, writing in the latest Monthly Report, take a sceptical view of suggestions to introduce a European unemployment insurance scheme.
Speaking on the sidelines of the Spring Meetings of the International Monetary Fund and the World Bank, Bundesbank President Jens Weidmann voiced his opposition to proposals for economic policy measures to counteract German current account surpluses. It would be “absurd”, Weidmann said, to discuss measures aimed at artificially weakening German competitiveness.