“The German economy is overcoming the coronavirus crisis and is poised for the start of a strong upswing,” writes the Bundesbank in its semi-annual projection. The Bundesbank’s economists expect that gross domestic product will reattain its pre-crisis level as early as this summer. It is likely that the rate of inflation will rise strongly to 2.6% in 2021.
Monthly Report: Limit local government cash advances and stabilise financing
According to the current issue of the Monthly Report, prior to the coronavirus crisis local government finances were in good shape overall, albeit with major differences from municipality to municipality. Now, as a result of the coronavirus crisis, the report points to a risk of budget imbalances becoming more widespread again and local governments turning to cash advances to finance their budgets. The Bundesbank is proposing a three-pronged approach to stabilising local government finances: reform local government financing, reduce the volume of legacy cash advances and tackle local governments’ financial problems at an early stage, with state governments to take on a particularly important role in this regard.
Weidmann: Enhance transparency of climate-related financial risks
Bundesbank President Jens Weidmann says that climate-related financial disclosures should be mandatory, and also sees central banks as having a role to play in helping to boost market transparency. “The Eurosystem has a legitimate interest in making climate-related risks more transparent,” he said in a speech at the Green Swan 2021 Global Virtual Conference, an event hosted by the Bank for International Settlements and others.
G-FSC annual report: German financial system stable so far in the crisis
The German Financial Stability Committee (G-FSC) has presented its eighth report on financial stability in Germany to the German Bundestag. Its report focuses on the impact of the coronavirus pandemic on the German financial system.