Executive Board member Burkhard Balz has introduced Fabian Huttner as the Bundesbank’s new representative in Madrid. The scale of the challenges associated with the single monetary policy in the euro area became evident in the wake of the financial crisis and during the coronavirus pandemic, Mr Balz said in Madrid. That makes it all the more important to reach out more to national authorities and financial institutions in the major euro area countries. It is for this reason that the Bundesbank has now resumed its practice of sending staff members to the German embassies in Paris, Rome and Madrid.

The Bundesbank advocates more tiered EU remuneration rules depending on a bank’s size and complexity as part of the impending implementation of the Basel III finalisation. Thought should be given as to whether small, non-complex institutions “need even more proportional regulation” under the EU’s current remuneration regime, the authors write in the October edition of the Monthly Report.

From the beginning of 2020 onwards, the coronavirus pandemic has been shaping economic developments around the world. However, as the Bundesbank writes in its Monthly Report, some economies have pulled through the crisis better than others. It notes that, whilst in a number of countries economic output has already returned to – or even exceeded – its pre-crisis level, in others it is still lagging behind. Extensive evaluations show that differences in the pattern of the pandemic and the measures taken to combat it, sectoral particularities and the scope of economic policy assistance can explain why individual economies have been affected differently.

The possible introduction of a digital euro has been the subject of intensive debate among specialists for some time now. The discussion has been slow to trickle down to consumers, however, as revealed by the findings of a representative study presented by the Bundesbank in its latest Monthly Report. 77% of participants surveyed in April 2021 had never heard of the digital euro.

The annual inflation rate in Germany was 4.1% in September, and the Bundesbank expects prices to continue rising for the time being. “Overall, the inflation rate is likely to rise further at first, before gradually declining in the coming year,” the Bundesbank’s economists write in the current issue of the Monthly Report, explaining that statistical effects are one contributing factor. 

The Eurosystem’s monetary policy has only a relatively minor impact on the prices of Bitcoin and other crypto tokens. This is the conclusion reached by Bundesbank experts in the September edition of the Monthly Report, which states that “monetary policy impulses explain only a fraction of the volatile price developments”. At first glance, the high rates of growth seen by crypto tokens appear to be attributable to other factors.

The Central Bank Council of the Bank deutscher Länder and its successor authority, the Bundesbank, was almost exclusively a men’s-only club: from 1948 until it was replaced by the Executive Board in the aftermath of the structural reform in 2002, only one woman – Julia Dingwort-Nusseck – managed to become a member of this body. On this Wednesday, 6 October 2021, she celebrates her 100th birthday in Hamburg. She is the oldest ever former member of the Central Bank Council.

The performance of German credit institutions was encumbered last year by the effects of the coronavirus pandemic. Virtually all of the categories of banks recorded either stagnating or receding results for the financial year before tax compared with 2019, the Bundesbank writes in its current Monthly Report. It notes that the surge in risk provisioning in credit business in particular and the ensuing deterioration in results from the valuation of assets were responsible for this.

“The recovery of the German economy, which began in spring, continued at a faster pace in the third quarter of 2021,” the Bundesbank writes in its Monthly Report. Particularly strong growth was reported for private consumption and services. Supply-side constraints persisted in industry, however, so that output continued to lag considerably behind strong demand.

Introducing central bank digital currency (CBDC) is not an end in itself, believes Jens Weidmann. Rather, a digital euro needs to provide a clear value added to the citizens of the euro area. “CBDCs should only be issued if the perceived benefits outweigh any potential drawbacks or risks,” the Bundesbank President said in a speech at a virtual conference.