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Interview 10.10.2017

"The fallout from the financial crisis lingers on"

Interview published in "Stuttgarter Zeitung"

Interview with Andreas Dombret conducted by Roland Pichler.
Translation: Deutsche Bundesbank

Mr Dombret, the global economy is booming. Can we consign the fallout from the financial crisis of 2008 to the history books?

The global economy is doing better again, which is a good thing. I am particularly pleased by the fact that the eurozone economy is now growing in many regions and areas. However, the fallout from the financial crisis lingers on. In some eurozone countries, unemployment is still higher than it was prior to the crisis. And the European banking industry, too, is still grappling with the after-effects. The high amounts of non-performing loans in some eurozone countries are, to a degree, still a consequence of the financial crisis. Major challenges thus still lie ahead; "no rest for the wicked", so to speak. The economic upturn is helpful, however.

Think tanks have revised Germany's outlook for growth upward. Is there a risk of overheating?

The economy is looking good at the moment, and indicators of sentiment are pointing to a continuation of the upswing. We currently do not see any signs of overheating. However, the good state of the economy should not blind us to the fact that Germany is facing difficult tasks over the longer term. Examples that come to mind include the looming demographic burdens, the impact of digitalisation and efforts to cope with the energy U-turn.

Public and private debt are still high in many countries. Are governments and consumers relying too heavily on the low-interest-rate policy?

Household deleveraging in Europe is making progress, but will naturally take time. The efforts of many euro area finance ministers to consolidate their government budgets have tended to slacken off in the past few years. These ministers should take advantage of the favourable economic situation and the currently low interest rates to intensify their deleveraging efforts and thus to place their countries' budgets on a sounder footing.

Calls are growing louder, and not just in the United States, to loosen financial market regulation. Rules have been tightened repeatedly since 2008 – are they constraining banks' lending?

It is particularly bank lobbyists who are afraid that onerous regulation could constrain lending. There is no way to confirm this, however. On the whole, lending in the eurozone has been on the rise over the past few years. Non-financial corporations' borrowing in August was up by 2.5% on the year. The surveys we have conducted among German credit institutions on credit standards have not identified any clear-cut change, either. We should not look at financial market regulation as standing in the way of a functioning, high-performance financial system. Quite the opposite, in fact. The financial crisis-induced reforms are designed to combat vulnerabilities in the system, as these can be very costly in the long run.

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Additional information

In conversation

Dr Andreas Dombret

Interview with Andreas Dombret,
Member of the Executive Board of the Deutsche Bundesbank

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