Two areas which may at first seem like two distinct worlds – foreign policy and central banking – are, in fact, bound by a shared mission: the pursuit of stability and international cooperation, Bundesbank President Joachim Nagel said in New York, where he received a particularly prestigious award: the Foreign Policy Association (FPA) Medal. The FPA awarded this medal in recognition of Mr Nagel’s commitment to responsible international cooperation. It pointed out that his leadership had been instrumental in safeguarding monetary stability, navigating inflationary pressures, and strengthening Europe’s economic resilience. 

Key principles that guide the work of central banks

In his speech, the Bundesbank President outlined the principles that he sees as guiding the work of central banks. He believes monetary policy decisions must not be guided by political convenience. They need to be made by central banks based on economic analyses and sound economic data. Otherwise, trust in their work would begin to erode. According to Mr Nagel, the statistics used also need to be independent. Reliable statistics are crucial – especially for central banks. They are the backbone of sound monetary policy, according to the Bundesbank President. According to Mr Nagel, statistics are reliable if the data accurately reflect reality, users can transparently understand the methods behind the numbers, and the statistics are impartial and independent. Lastly, he stressed that central banks needed to focus on their mandate: to safeguard households’ purchasing power and protect prosperity. Our monetary policy decisions need to be geared towards this objective, he said, and without being diluted by other politically convenient purposes. Given growing uncertainty and rising political tensions, this principle is becoming ever more important, Mr Nagel noted.

Foreign Policy Association: commitment to strengthening democracy

Founded in 1918, the FPA is a non-profit, non-partisan educational organisation based in New York City. It seeks to contribute to strengthening democracy by encouraging citizens to participate in the foreign policy process and by developing awareness, understanding and informed opinion on US foreign policy and global issues.

Past FPA Medal recipients include former US Treasury Secretary Timothy Geithner, former ECB President Jean-Claude Trichet, former Australian Prime Minister Kevin Rudd and most recently Banque de France President François Villeroy de Galhau.