Current issues on the policy of the Bundesbank

Assessments of the Bundesbank's monetary policies should take into account the difficulties of the domestic economy. In a phase of stagnation German exports are lagging because of the strength of the Deutschmark and rising production costs. The inflationary pressures arise because the costs of German unification were underestimated. Policy changes came belatedly, the ‘solidarity pact’, and cuts in the federal budgets have yet to be really tested, and monetary policy cannot by itself fully compensate for other policy weaknesses. Admittedly, the Bundesbank's monetary policy has had negative effects abroad, but calls for a rapid easing of interest rates neglect German domestic constraints as well as German responsibilities within the EMS. Stability is built on historical reputation, and the stability of the Deutschmark must be a prime consideration if others can continue to have confidence in it

Economic policy · Economics · German · Inflation (cosmology · International economics · Lagging · Macroeconomics · Monetary economics · Monetary policy · Political science · Politics · Price of stability · Solidarity · Unification · European Monetary and Fiscal Policies