Ms. Buch, you are responsible for financial stability on the Bundesbank’s Executive Board. How do you keep the markets stable?
M“Financial stability” is often associated with the ups and downs, the short-term fluctuations, in the markets. But that is not the central point for us. Financial stability means that the financial markets work – liquidity is provided, investments are financed, savers find suitable investment opportunities, and payment transactions work. Especially in times of stress like this, the financial markets should be sufficiently robust so that they support the economy and do not reinforce crisis-ridden developments.
So what about financial stability in these Corona times?
Business editor, responsible for the financial market.
In March, when the pandemic reached Europe and Germany, market stress was very high. There were certainly dangers to the stability of the financial system: Many companies suddenly lost their sales. This meant that there was no liquidity to pay salaries and to cover other costs. Lenders could not close this gap: they were cautious because they could hardly estimate how long the revenue would ultimately fail and when it would start to recover.