Monday, March 23, 2015

Assessment of the Bundesbank: “Monetary Union has to cope with bankruptcy” – NEWS


 Monday, March 23, 2015


 Regarding a possible Greek default, the Bundesbank will be a tough assessment: So something had to endure the monetary union and central banks are likely never to step in. And the Institute makes demands.



The euro zone must be able to withstand the insolvency of a member country of the Bundesbank’s view. States are generally responsible for their own debts, the Bundesbank said in its monthly report. “In this respect also the extreme case of a bankruptcy of a Member State must be as manageable in the monetary union.”

A financing of states in financial difficulties by the central bank is just as forbidden as a joint liability. Therefore, the Bundesbank insisted on reforms to make the financial system in the currency area vulnerable to crises.

In general, according to federal bank that the financial stability in the euro zone must be made independent of the development of individual budgets. Contagion by countries in difficulties needed to be addressed. “This would also take pressure off of monetary policy to be held accountable for the financial stability or the public debt sustainability.” Monetary policy, which was aimed at stability must resist the pressure to be put on over-indebtedness of banks and States accountable.

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A important role to play according to the German bank regulation. You reaffirming its demand to repeal previously existing exceptions for government bonds in the capital deposit. These rules should be “pushed back the medium and long term ended.”

So far, banks have for their involvement in government bonds deposit no capital, because the papers are assessed as risk-free. But because of the euro debt crisis, this view has been deprecated: For countries such as Greece could be rescued from their EU partners only with billions in aid from collapsing. The Basel Committee on Banking Supervision announced in January a review of exception rules.



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