Buba’s Dombret emphasises importance of market-economy principles

Andreas Dombret, a member of the Bundesbank's executive board, on Tuesday said recent reforms introduced by policy-makers should be built around market-economy principles.

At the annual congress of the Verein für Socialpolitik, Dombret said: "Despite – or perhaps precisely because of – the need for reforms, there is a considerable risk that policy-makers will make decisions that are difficult to reconcile with principles of a market economy. Those who are already sceptical about the market economy system and about globalisation, and who believe the current crisis to be the result of market failure rather than political failure, may even welcome this."

However, Dombret said measures that boil down to protectionism, continuous direct market intervention or more extensive macroeconomic fine-tuning were the wrong answers to the crisis. Instead, Dombret said the regulatory framework would need to be adjusted in such a way that the focus is again put more squarely on market-economy principles such as individual responsibility and private liability.

Click here to read the speech