In cooperation with the Dutch and Swedish central banks, the Bundesbank invited participants to an international conference on macroprudential topics. This year’s event in Eltville am Rhein addressed issues such as tackling interest rate risk, capital buffers for banks and non-standard monetary policy. The keynote speaker was Tobias Adrian of the International Monetary Fund (IMF).

The so-called Blessing letter, dated 30 March 1967, forms part of the correspondence between the President of the Deutsche Bundesbank at the time, Karl Blessing, and the then Chairman of the Board of Governors of the US Federal Reserve System, William Martin. Blessing addresses US concerns that the Bundesbank might convert US dollars into gold on a massive scale.

Given the uncertainties in the markets at present, it is gratifying that institutions are well equipped overall, said Bundesbank Executive Board member Michael Theurer, commenting on the outcome of the latest stress test. The stress testing exercise was run by the European Banking Authority (EBA) in cooperation with the European Central Bank (ECB). It indicated that the euro area’s banking sector remains capable of enduring even under tougher economic conditions.

In light of the ongoing tariff dispute, uncertainty in the financial markets and within firms is high, Bundesbank President Joachim Nagel has said in a joint press statement with Federal Finance Minister Lars Klingbeil. The pair were speaking whilst attending the meeting of G20 finance ministers and central bank governors in KwaZulu-Natal. Mr Nagel stressed the vital importance of reaching an agreement in the conflict over tariffs, but he insisted that the EU should not acquiesce to the United States at all costs. He also called on the United States not to treat the situation like a game: “At the end of the day, when there’s the potential for economic policies that could cause major damage on a global scale, it’s everybody’s prosperity that’s at stake.”

Real gross domestic product (GDP) was probably more or less stagnant in the second quarter, according to the Bundesbank’s latest Monthly Report. One reason for this was frontloading effects relating to exports and industrial production in anticipation of higher US tariffs in the first quarter of 2025. In addition, activity in the services sector probably expanded only slightly, partly because private consumption is likely to have provided less impetus. The construction sector is even expected to make a significantly negative contribution to growth. Inflation was down slightly to 2.0 % in June.

German export market shares have been contracting since 2017, and especially since 2021. According to the latest Monthly Report, this is largely due to a deterioration in the competitiveness of the German economy. More than three-quarters of the losses in market shares between 2021 and 2023 were the result of supply-side constraints. In this issue, the authors look at what is behind the decline in German export market shares and derive possible structural reforms.

Monetary policy must be reliable, but policymakers must not overly restrict its flexibility, Bundesbank President Joachim Nagel said at the 10th Bundesbank IAW Lecture in Tübingen. In his speech, Nagel addressed the ECB’s original monetary policy strategy, which has undergone significant reviews. 

As part of the Bundesbank Invited Speakers Series (BISS), Hiroshi Nakaso, Chairman of the Daiwa Institute of Research and former Deputy Governor of the Bank of Japan, delivered a keynote speech at the Bundesbank’s Regional Office in Hesse. Under the title “Germany and Japan 2.0 – Addressing Common Challenges at a Global Inflection Point”, the event brought together perspectives on economic developments in two of the world’s largest industrial economies.

What does the rise of artificial intelligence (AI) among firms mean for the financial industry and financial supervision? How is the increasing digitalisation of payments affecting the financial industry? At BaFinTech, a two-day industry conference co-hosted by the Bundesbank and BaFin in Berlin, representatives of the two authorities discussed digital innovations and the associated risks and rewards with both the financial sector and experts from academia and industry.

Europe should stay on course and remain an attractive place to work. And I think this generation here has a vital role to play in that, said Bundesbank President Joachim Nagel at the two-day international conference “Young Factor” held in Milan by the Osservatorio Permanente Giovani-Editori with the aim of improving financial literacy. Over 350 school pupils attended this year’s event to discuss financial literacy and the European Union with the governors of several Eurosystem central banks.