According to Bundesbank findings, exchange rates react in different ways to financial market crises. While no crisis-specific behaviour can be found for the euro, the Swiss franc, US dollar and yen clearly react to heightened tensions on the financial markets. In its July Monthly Report, the Bundesbank shows that exchange rate reactions have various causes.

Today’s low interest rates are making it difficult for investors to preserve the value of their assets. After all, if the interest received is lower than the rate of inflation, the value of an investment will diminish over time. However, this state of affairs – a negative real interest rate on deposits – is by no means a new phenomenon that is unique to the prevailing low-interest-rate environment. As it happens, negative real rates of interest have been the norm, rather than the exception, over recent decades.

In the past, financial system crises have often been triggered or accompanied by a protracted marked rise and then abrupt sharp fall in property prices. At the sixteenth Bundesbank Spring Conference, leading global economists, central bank representatives and delegates from international organisations presented and discussed their latest findings on this topic.

The Bundesbank posted a profit of €4.6 billion for the 2013 financial year. "Despite interest income being lower, the Bundesbank has recorded a higher profit for 2013 than for 2012 as it has not been necessary to transfer any more funds to the risk provisions," Bundesbank President Jens Weidmann explained at the Bundesbank’s 2013 financial statements press conference.

ECB Executive Board member Sabine Lautenschläger says that banks in Europe would be put through their paces. "I think it's hugely important for our stress test to be tough," she commented on the second day of the Bundesbank's symposium. This year was an opportunity to straighten things up, she added.

Bundesbank President Jens Weidmann believes that financial stability must not be adopted as an additional monetary policy objective on a par with price stability. This would put the credibility of central banks at risk, he explained at a Bundesbank symposium. Monetary policy was not a suitable instrument for safeguarding financial stability. Renowned economists then discussed the interaction between monetary policy and financial stability.

When a country joins the European Union or the euro area, that country's central bank takes a share in the capital of the European Central Bank. To make sure a correct weighting is maintained amongst the member states, the European Central Bank adjusts the "capital key" for all the national central banks on a regular basis.

At a press conference presenting this year's Financial Stability Review, Bundesbank Deputy President Sabine Lautenschläger and Executive Board member Andreas Dombret commented that the tensions on the international financial markets had eased, which had also benefited the German financial system. Yet they warned that the side-effects of the crisis measures were now becoming increasingly apparent – especially for banks and insurers.

In the next few weeks, the ECB will undertake a comprehensive assessment of banks in order to create transparency prior to the launch of the Single Supervisory Mechanism (SSM). This European-level supervisory mechanism is part of a project designed to avert the dangers to financial stability that can be caused by distress in national financial systems: the European banking union.

The Bretton Woods fixed exchange rate system collapsed 40 years ago.