). Germany’s size, and Frankfurt’s status as the euro area’s biggest financial centre, also means that the Bundesbank plays an outsize role in the euro system. Together with its Italian counterpart it maintains the infrastructure for2 system processes half of the volume of payments made in the euro area.ECB
Once admired for its willingness to act, in the past decade or so the Bundesbank has sought inaction. Mr Draghi derided its boss, Jens Weidmann, as saying “Nein zu allem” or “no to everything”. Various bond-buying programmes have gone ahead despite its objections.’s price-stability target, of inflation “close to, but below 2%”, is asymmetric, reflecting the Bundesbank’s aversion to inflation. But thehas come to view its target as symmetrical.
Being part of a monetary union may have allowed the Bundesbank to become more dogmatic, knowing that thewill nevertheless act to avoid crisis. Despite its reputation for being uncompromising before the euro, it was in fact pragmatic from time to time, notes Adam Posen of the Peterson Institute for International Economics. It even briefly conducted asset purchases in the 1970s.
And Germany’s appointment of Isabel Schnabel, a more consensus-minded economist than Mr Weidmann, to the’s executive board might help the bank communicate directly with the public. In a speech on February 11th she tackled common misperceptions around negative interest rates.
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