Germany: D-mark restraint

Article Abstract:

The Bundesbank or German central bank has changed its approach to the German mark and aims to avoid a rise in the value of the mark, according to ABN AMRO Hoare Govett. This means that interest rates could be cut. The government is unable to use fiscal policy to give a boost to the economy due to seeking to conform to Maastricht targets, so there is more pressure to lower interest rates. Germany also faces structural problems and the high value of the German mark has affected exports.

Economic aspects, Germany, Deutsche Bundesbank, Mark (Germany)

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No weak euro

Article Abstract:

European monetary union (Emu) will not necessarily involve a weak currency if Spain and Italy become members, according to Paribas Capital Markets. If the European Central Bank (ECB) raises interest rates in response to inflationary pressure from budget deficits, the currency will be stronger. The ECB is an independent body which has one aim, to keep inflation low. It is likely to set a tough inflation goal. Markets may not be convinced until they have seen the ECB at work.

Central banks, Western Europe, Monetary unions

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