Tag: Jens Weidmann

Claire Jones The Bundesbank’s balance sheet and Eurosystem politics

March 13, 2012 10:30 pm by Claire Jones

Jens Weidmann, the Bundesbank’s president, claimed today that the decision by the central bank to more than double the provisions for losses on assets held on its balance sheet on the back of “risks stemming from monetary policy operations” was not politically motivated.

Here at Money Supply, we beg to differ.

In fact, the three figures below, taken from the Bundesbank’s 2011 balance sheet, out today, highlight rather nicely just why the relationship between Buba and the European Central Bank is becoming more fraught.

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Posted in Bundesbank, European Central Bank |

Ralph Atkins Draghi and the Bundesbank challenge

March 7, 2012 5:53 pm by Ralph Atkins

Mario Draghi on Thursday faces perhaps his biggest political challenge since he become European Central Bank president in November.

Last week, a leaked letter from Jens Weidmann, Bundesbank president, highlighted rising anxiety at Germany’s central bank over the risks entailed in the ECB’s extraordinary actions to support the eurozone banking system, which have seen it inject more than €1trn in three-year liquidity in recent months.

How Mr Draghi responds to the confrontation at his press conference after Thursday’s governing council meeting could determine the extent to which his stewardship of the eurozone crisis is undermined by Bundesbank resistance.

The dispute could well dominate Thursday’s proceedings: with the ECB still waiting to see the impact of its liquidity measures on the real economy, no change is expected in interest rates. The suspense over Greece’s bail-out is unlikely to have cleared.

Mr Weidmann’s letter created considerable irritation and bewilderment among other members of the ECB’s 23-strong governing council.

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Posted in Bundesbank, European Central Bank |

Ralph Atkins The (well) reserved Bundesbank

March 6, 2012 12:11 pm by Ralph Atkins

What do central bankers do when they are worried? They increase their reserves.

Tuesday’s Bild Zeitung reports the Bundesbank will next Tuesday declare a sharp drop in profits after increasing provisions against risks on its balance sheet. The amount transferred to the German finance ministry would fall below €1bn, Bild said. That would be less than half the €2.2bn profit reported for 2010 – which was around half the previous year’s figures, again because of higher provisions.

The Bundesbank is not confirming Bild’s report, but it sounds plausible. Jens Weidmann, Bundesbank president, told Handelsblatt in an interview last month that the rising risks borne by Germany’s central bank would require “more rather than less provisions. That will have an equivalent impact on the level of Bundesbank profit.”  Besides significantly higher provisions this year would fit with the Bundesbank president’s increasingly-cautious rhetoric more recently.

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Posted in Bundesbank, European Central Bank |

Claire Jones The week ahead in central banking

March 2, 2012 6:48 pm by Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

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Both the European Central Bank and the Bank of England set monetary policy on Thursday.

Neither the governing council nor the monetary policy committee are expected to budge. But we do have Mario Draghi’s monthly press conference to look forward to.

Expect a few awkward questions on Jens Weidmann’s leaked letter as well as reaction to this week’s offer of three-year loans.

The presser takes place at 14.30 local time (13.30 in the UK) on Thursday.  The Bank’s decision is released at noon local time, with the results of the governing council vote out at 12.45 in London (13.45 in Frankfurt).

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Posted in Bank of England, European Central Bank, Federal Reserve |

Ralph Atkins Weidmann and the ECB’s Greek bonds

February 15, 2012 10:05 am by Ralph Atkins

Jens Weidmann, Bundesbank president, would have “no problem” with the European Central Bank selling its Greek bonds as part of a package to help the country’s bail-out. But he has thrown doubt on whether governments will pick-up the bill.

“I would have no problem removing the balance sheet risks that we were hesitant about accepting in the first place – so long as their removal does not lead to losses,” he told Handlesblatt, the German business newspaper, in an interview published on Wednesday.

His comments provide confirmation that the ECB would be prepared to forgo the profits it had expected to make on its Greek bond holdings – but, crucially, that no deal has yet been struck.

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Posted in Bundesbank, European Central Bank |

Claire Jones Sir Mervyn’s sympathy for the ECB

November 16, 2011 4:31 pm by Claire Jones

The governor of the Bank of England has often been critical of eurozone leaders, frequently condemning their failure to accept that the region’s sovereign debt crisis is one of solvency, not liquidity.

But, at the Bank’s Inflation Report presser on Wednesday, Sir Mervyn was a little more supportive of the region’s central bank.

Forget calling for the ECB to become lender of last resort for the more troubled of the eurozone’s governments, he said. It was simply not the responsibility of it, or any other central bank, to take on such a role.

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Posted in Bank of England, European Central Bank |

Ralph Atkins ECB: forced to keep buying bonds?

October 21, 2011 7:05 pm by Ralph Atkins

Not just financial markets look set to be disappointed by the European Union weekend summitry, which has just started in Brussels. A big loser could be the European Central Bank.

The ECB was forced to reactivate its government bond buying programme in August after the eurozone leaders’ last attempt at crisis management – at a summit in July – backfired and the crisis spread to Italy and Spain. Then, the expectation was that the European Financial Stability Facility would become operational and able to takeover the ECB’s role in intervening in bond markets. Without an effective deal soon to enhance the EFSF, such hopes will be dashed.

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Posted in European Central Bank |

Ralph Atkins Weidmann entertains

September 21, 2011 4:28 pm by Ralph Atkins

Is Jens Weidmann, Germany’s Bundesbank president, rallying opponents of the European Central Bank’s government bond purchasing scheme? The Frankfurter Allgemeine Zeitung reports he hosted a secret meeting on Tuesday in the wine region that surrounds Frankfurt. Those apparently invited included Yves Mersch and Klaas Knot, his counterparts from Luxembourg and the Netherlands who are similarly conservative-minded.

Germany is awash with conspiracy theories these days about the ECB, and the idea that Mr Weidmann would want stiffen the sinews of other opponents of its bond buying – which has exceeded €70bn in the past six weeks - might appear plausible. I have heard an alternative version of the story, however.

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Posted in Bundesbank, European Central Bank |

Claire Jones The week ahead in central banking

September 9, 2011 1:19 pm by Claire Jones

Our new week ahead email will help you to track the most important events in the central banking world. To see all of our email and alerts visit www.ft.com/nbe

Both of next week’s key events are on Monday.

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Posted in Bank for International Settlements, Bank of England, European Central Bank, Federal Reserve, International Monetary Fund |

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Chris Giles Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS

Ralph Atkins, Frankfurt bureau chief, has been writing about European economics and politics for the Financial Times for more than 20 years following an economics degree from Cambridge. He has been watching the European Central Bank and eurozone economies since 2004. He has previously worked in London, Bonn, Berlin, Jerusalem and Brussels. RSS

Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS

Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS

James Politi is US economics and trade correspondent for the Financial Times, based in Washington DC. He joined the Washington bureau in January 2008 following four and a half years as US deals correspondent covering M&A and private equity. James Politi joined the FT in London in 2000 with an MSc at the London School of Economics, and undergraduate degrees from Georgetown University and the University of Florence. RSS

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