Germany
German banks’ capital levels affect loan supply – Bundesbank paper
Authors find balance sheet data shows loan supply has positive elasticity to capital levels
German court leaves Bundesbank caught between two legal decisions
Ruling may hamper ECB’s new PEPP programme as it is not constrained by PSPP limits
German court rules ECB must provide more evidence on PSPP
Judges strongly criticise ECJ’s ruling on QE programme, but stop short of declaring it unlawful
Debts, deficits, central banks and inflation
Forrest Capie and Geoffrey Wood ask what insights history can provide for central banks and governments managing abrupt, large increases in debt
Individual German banks at risk from interbank shocks, paper finds
Bundesbank paper presents simulation method for analysing interbank markets
El-Erian on Covid-19 policy risks, ‘zombie’ markets and central bank capture
Former Pimco chief says Fed move into high yield is a step too far, new rules needed on leverage and false liquidity, and narrow window emerges for central banks to shed some of their policy load
Transfer season
Trade frictions with the US have caused a mass industrial transfer to China’s neighbours. Zhou Chengjun, IFF Academic Committee member and inspector of the Macro‑prudential Policy Bureau of the People’s Bank of China, says that shouldn’t stop China…
Lagarde misstep overshadows ‘bold’ measures, analysts say
ECB president seemed to have hampered governments’ debt financing at a critical juncture
How could the coronavirus affect the world economy?
Central banks may lack firepower, while public health readiness differs sharply between countries
Do low rates spur investment?
Many believe low interest rates spur investment, but there appears to be little hard evidence to support such claims, writes former IMF head Jacques de Larosière
German house prices rise by slowest rate since 2014 – Bundesbank
Housing prices continue to rise but at slower rate, especially in major cities
Schnabel takes on Germany’s ‘false narratives’ on ECB policy
Criticism based on “half-truths” imperils trust in single monetary policy and “undermines European cohesion”
ECB monetary policy was weakened by regulation – Bundesbank paper
Tighter regulation reduced lending by weakly-capitalised banks from 2008 to 2018 – researchers
Lifetime achievement award: Otmar Issing
The architect of the euro’s monetary operating framework is still playing an important role in shaping the debate on monetary policy
Watch out for Brexit cliff edge 2.0, experts warn
Measures to mitigate a sharp rupture for financial services could be less likely at end-2020
Book notes: The long journey of central bank communication, by Otmar Issing
This book is a “masterly exposition on central bank communication, its evolution and continuing challenges”, writes Anand Sinha
ECB calls for changes to German draft CCP recovery law
Law should be rewritten to provide more transparency on Bafin’s procedures and approach, ECB says
ECB largely welcomes move to expand German macro-pru powers
ECB says measures giving BaFin greater powers are “appropriate”, but need better data
The challenges facing Christine Lagarde
The new ECB president will need to focus on a successful review of the ECB’s monetary and communications policy, while encouraging fiscal stimulus and structural reform
Bundesbank’s Balz: consumers may be ‘trapped’ in big tech ecosystems
Big tech firms offer consumers convenience, but there are also reasons to worry, Bundesbank official says
German finance minister offers deal on eurozone deposit insurance scheme
New proposals may not be enough to overcome other EU countries’ opposition
Germany’s tight fiscal policy may hamper ECB normalisation – IMF research
Sustained budget surpluses have reduced debt issuance and contributed to ever-lower yields
Was Draghi one of the great central bankers?
A look back at how Mario Draghi confronted the financial crisis and existential concerns about the euro
German government to nominate Isabel Schnabel to ECB’s board
Economist is considered more capable of influencing monetary policy than previous German officials