Weidmann: Bundesbank stands for stability in Germany and Europe
Speaking at an event to mark the Bundesbank's 60th anniversary, Bundesbank President Jens Weidmann underscored the institution's importance for the stability culture in Germany and Europe.
"Over the last 60 years, the Bundesbank has not been afraid to ruffle a few feathers if it sees stability risks," he said. That had not damaged its reputation among the general public. The introduction of the euro had marked a turning point for the Bundesbank, with the Bank now no longer solely responsible for the national currency. However, joint responsibility for the euro was
"no less important", Weidmann explained.
Baden-Württemberg's state premier, Winfried Kretschmann, also spoke at the reception. In his speech, he paid tribute to the Bundesbank for its steadfastness in the face of attempts by politicians to influence it. Independence and price stability had always been two of German central bankers' key principles.
"Thanks to the Bundesbank's successful course, it is now generally acknowledged that stable money is one of the key prerequisites for economic prosperity and that central banks' independence should be a core element of any successful monetary policy," Kretschmann said.
Stable monetary union cannot be taken for granted
Weidmann stressed that the Bundesbank continued to enjoy a high reputation among the general public – a reputation acquired through decades of stability-oriented policymaking – not least thanks to its strong regional presence. Nowadays, the Bundesbank stood for stability in Germany and in Europe, he said. After all, the European Central Bank (ECB) had been modelled on the Bundesbank, the Bundesbank's president reminded the audience. However, he warned, the stability of the monetary union could not be taken for granted.
"The extensive crisis measures taken by European policymakers and the Eurosystem may have prevented the crisis from escalating. But they have not made the monetary union stable permanently," Weidmann explained. The Bundesbank was therefore advocating institutional reform in the euro area. These reforms, Weidmann went on, should not aim to extend joint liability. The outcome of such a course could be a transfer union, he warned. Weidmann said that he currently saw no willingness to move decision-making powers to the European level. That left only the option of strengthening states' individual national responsibility. The Bundesbank had therefore made proposals on how to make the no bail-out principle more credible.
Broad range of tasks
The Bundesbank's president also talked of the central bank's broad range of tasks, even after the introduction of the euro. As a member of the ECB's Governing Council he was, for instance, involved in designing monetary policy in the euro area, he pointed out. The Bundesbank was traditionally responsible for the cash supply, he said, but the Bank's key tasks also included cashless payments. Not a lot of people knew that, he said.
"That could be because our payment systems work safely and smoothly," Weidmann surmised. In addition, the Bundesbank had been entrusted with new tasks as a result of the financial crisis. For instance, the Bank received a statutory mandate in 2013 to contribute to financial stability within Germany. In banking supervision, the Bank helped the ECB supervise significant institutions in Europe and directly supervised less significant institutions.