December 2001 - Nr. 12
Bundesbank President Sees Prospects for German Economic Recovery
Twig - Despite a spate of bleak reports on recent German economic performance, Ernst Welteke, president of the Deutsche Bundesbank (Federal Reserve Bank of Germany) sees a bright chance for economic recovery. In the shadow of political uncertainty and a weakening global economy, he says "the mood is worse than the reality." Welteke addressed a conference held by the Zeitschrift fuer das gesamte Kreditwesen (a German financial industry journal) on Wednesday (November 7) in Frankfurt.
The Bundesbank president cited recent developments in the financial markets to support his "guarded optimism on the medium-term outlook." Interest rates have gone down since mid-2000 and equity prices seem to be bottoming. Welteke also sees an improvement in the international competitiveness of the German and European economies. Moreover, "already agreed upon tax reductions have yet to take their full effect."
The economic and monetary links that bind Europe together have already proven their worth in past crises, said Welteke. The combined efforts of the Euroland nations and the European Central Bank to ensure economic stability have, for instance, kept the most recent oil price increase from battering the European economy as brutally as in the 1970s.
The monetary union has also buttressed economic stability in Euroland in the wake of the terrorist attacks, Welteke believes. In a Europe of many currencies, uncertainty in the financial markets would have spurred a flight from federal bonds and the currency markets. "The expanded monetary union cushions the effects of external shocks on individual nations," Welteke asserted. Tighter integration of economic and monetary policies brings advantages for all euro nations, in his view.
