Striking Statements on Borrowing from the President of the German Central Bank

Germany's Central Bank Emphasizes Joint Borrowing

The President of the German Central Bank, Joachim Nagel, reiterated his support for additional joint borrowing by the European Union (EU) in an interview with Politico on February 6. This statement came ahead of the informal summit of EU leaders scheduled for this week.

Safe Assets Are Important to Attract Investors

Nagel emphasized in the interview that making Europe attractive is possible through attracting foreign investors. Safe European assets and a more liquid European market are crucial to support this process,” he stated.

Foundations of Borrowing and Europe's Future

The EU had resorted to collective borrowing for the first time in the recovery process following the Covid-19 pandemic. Nagel had previously called for an EU defense budget supported by joint bonds. “European debt is not something for free, and doubts regarding fiscal sustainability should not jeopardize the chance of improving common policies,” he said.

Notable Statements

While Nagel did not provide a specific figure on how much joint borrowing is needed, he stated, “If you want to create liquidity, you need to give an indication about the volume you will supply to the markets for a certain period and for a specific purpose.”

The Role of the Euro and International Reputation

European Central Bank policymakers are taking steps to enhance the international reputation of the euro. Nagel noted that joint borrowing is seen as a way to support these efforts, stating, “Euro could play an important role here.” He also emphasized that gradual progress in the euro's international role is acceptable.