MNI BRIEF: Deglobalisation 'Disastrous' For Germany - Nagel

Deglobalisation has not yet become a “megatrend”, but escalating trade conflicts and reduced international economic integration could have “disastrous” effects for export-reliant Germany, Bundesbank president Joachim Nagel said in a speech on Thursday.

“It would also have an impact on monetary policy if a shift of production to Europe were to increase the labour shortage. Because that would ultimately have a price-driving effect,” he added.

Climate-related financial risks cannot be neglected by ECB monetary policymakers, Nagel said, and he expressed support for greening the central bank’s corporate bond holdings. “However, it would be wrong to invest permanently in green securities if it is not required by monetary policy. “Nor can we align interest rates with the goal of supporting climate-friendly investments [...] The most valuable contribution of monetary policy to climate policy is price stability” (see MNI INTERVIEW:ECB To Fine Banks Missing Climate Goals-EldersonElderson).