"Freedom, democracy and the rule of law are what shape Europe as a community of peace and shared values!" Interview in "Gesichter der Demokratie"

Interview with Jens Weidmann conducted by Sven Lilienström
Translation: Deutsche Bundesbank

Dr Weidmann, you have been President of the Deutsche Bundesbank since 1 May 2011. Our first question for you: how important are democracy and democratic values to you personally?

Every so often, we should take a moment to realise how lucky we are to live in a democracy. We have all the more reason to defend democracy and its values. For me personally, democracy means that I can help determine how our country evolves in future: by voting in elections, but also by being an engaged citizen. And as a central banker, it’s important to me that I interpret my statutory mandate narrowly, because central bank independence goes hand in hand with a limited mandate – otherwise democratic rights would be undermined.

In your speech marking the Bundesbank’s 60th anniversary, you predicted that the bank would also celebrate a 350th anniversary – only to add: “But who can say”. Why do we need the Bundesbank?

No one can see that far into the future. But I’m confident that the Bundesbank will continue to perform its tasks well for a long time to come. The Bundesbank stands for stability in Germany and Europe. As the largest central bank in the Eurosystem, it plays a key role in ensuring a stable euro. In Germany, it does its part in keeping the financial system stable. And it works alongside others to ensure that payment systems function smoothly.

One of the issues that the “Faces of Democracy” initiative advocates for is strengthening European values. You are a member of the Governing Council of the ECB. How much is Europe part of who you are and what is your vision for a united Europe?

I studied in France and Germany and also worked at the Banque de France for a time. Many people in my social circle come from, or live in, other European countries. And finally, I’m part of the decision-making body of a key European institution, the ECB. Europe is much more than just a single market, more than economic prosperity. It is a continent that gives its people myriad opportunities. Purely in practical terms, Europe can improve the lives of its citizens, by coming up with joint solutions to issues such as climate action and external security. In doing so, it is important that democratic structures are preserved. After all, freedom, democracy and the rule of law are what shape Europe as a community of peace and shared values. 

Central banks are among the key players in economic and fiscal policy. This raises the question: how much political influence do independent central banks have on politicians, and vice versa?

We were granted independence so that we could ensure a stable currency, free from political influence. In turn, our mandate was tailored to the primary objective of price stability. We are not permitted to pursue other aims in our own right or to play an active role in other policy areas. Those are decisions that governments and parliaments have to make – without interference from the central bank. So there are clear limits on mutual influence which have to be respected, for example when it comes to the issue of climate change.

On the topic of green monetary policy: the democratic authority of central banks is restricted to safeguarding price stability in the euro area. Even so, the ECB plans to become ever “greener”. How can that be done?

In July, the ECB Governing Council decided to incorporate climate change considerations more fully into its monetary policy framework. Climate change and the transition to a carbon-neutral economy may affect the price outlook and change the riskiness of assets on our balance sheet. Both are relevant to stable prices. That’s why we’re expanding our analytical capacities, calling for disclosure of the necessary information and enhancing our risk management. But this shouldn’t be confused with us having our own climate policy. It’s not our place to correct or pre-empt the results of the democratic decision-making process by parliaments and governments.

“Next Generation EU”: the European Union has launched a recovery fund worth €750 billion to pull through the coronavirus pandemic. Is it a one-off, or the first step towards a fiscal union?

The EU countries decided to support each other financially in the crisis. The fund will be financed by common debt. An exceptional situation like the pandemic can justify this as a one-off. However, there is no prospect of ongoing debt at the European level in the European Union’s current set-up. Mutualised debt requires joint control, if we wish to preserve the European Union as a union of stability. That would require Member States to relinquish national powers to the European level. A fiscal union cannot be allowed to be introduced through the back door, however. We need open debate among the public and parliaments on how Europe should be shaped.

Dr Weidmann, when you took up office you were the youngest Bundesbank President to date. Did you ever have the feeling, especially at the start of your tenure, that you had to make a special effort to prove yourself because of your age?

To the odd person, I did of course appear quite young for the office of Bundesbank President. But at 43, I was well prepared thanks to my education and professional positions – including at the Bundesbank. Personally, I saw my young age as more of an advantage; I could look at some things with fresh eyes. And ageing is inevitable anyway: today, I’m the longest-serving member of the ECB’s Governing Council. In that capacity, I share responsibility for stable money in the euro area, and I’m fully committed to that. That was just as true then – in the midst of the sovereign debt crisis – as it is now.

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