The International Monetary Fund (IMF) and World Bank held their joint spring meeting in Washington DC from 11 to 13 April 2014. Established some 70 years ago, the IMF’s objective is to promote international monetary cooperation.
After a long debate with the European Council and the European Commission, the European Parliament on 15 April 2014 adopted the Single Resolution Mechanism (SRM) for banks, under which key competencies and resources are to be centralised in the event of the failure of a bank in the euro area or in other member states participating in the banking union. The SRM complements the Single Supervisory Mechanism (SSM), thus achieving a balance of liability and control.
At this year's spring meeting of the International Monetary Fund (IMF), Bundesbank President Jens Weidmann emphasised the need for the prompt implementation of the quota and governance reforms that were agreed by the IMF Board of Governors during the 14th General Review of Quotas in 2010. The reforms include doubling the IMF's quotas and shifting voting power in favour of emerging market and developing countries.
Bundesbank President Jens Weidmann says the risk of a deflationary spiral in the euro area is very low. In an interview with journalist Annette Weisbach from the CNBC he talks about the possibility of unconventional measures of the ECB, painful processes of adaption in Europe and Greece´s comeback on the financial markets.
German enterprises are relatively crisis-resistant, according to the Bundesbank’s latest Monthly Report. "German industry has shown great capacity for shock absorption," the Report explains, and "proved able to handle a heightened level of risk in a relatively short space of time". Other focal points of the Report are the shadow banking system in the euro area and its monetary policy implications, the German balance of payments for 2013 and the current performance of the German economy.
The Market Economy Foundation (Stiftung Marktwirtschaft) has awarded the Wolfram Engels Prize to Bundesbank President Jens Weidmann. In the jury’s view, the award recognised Mr Weidmann’s clarity in matters of regulatory policy and his advocacy of price stability, fiscal sustainability and legal certainty.
The bankruptcy of US investment bank Lehman Brothers some five years ago is etched in the collective memory of the financial world. Speaking at a public event, Bundesbank Executive Board member Andreas Dombret took stock of the measures which have been taken so far to prevent the emergence of further crises. Mr Dombret said that further action was needed, particularly concerning the regulation of insurers, the shadow banking system and government bonds.
Germany ran a current account surplus of €206 billion in 2013. Germany will in all likelihood continue to run a positive current account balance for the foreseeable future, but the surpluses are likely to diminish in size. In addition, broad structural changes aimed at improved growth prospects may contribute to this indirectly.
According to Bundesbank President Jens Weidmann, Germany will continue to record current account surpluses for the foreseeable future. However, liberalising the services sector could improve Germany’s growth prospects and also mitigate imbalances in the euro area.
The member states of the euro area responded to the financial crisis by conceiving the banking union, thereby setting in motion a fundamental reform of the European financial architecture. Significant progress has been made since the first political talks were held in mid-2012. November 2014 will see the ECB assume supervisory responsibility for around 120 credit institutions across the euro area.