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EURO

German architect of Euro currency dies aged 85

Former Bundesbank president Hans Tietmeyer, a key architect of the euro who oversaw its introduction in Germany, has died at the age of 85, the central bank announced Wednesday.

German architect of Euro currency dies aged 85
Hans Tietmeyer. Photo: DPA

Tietmeyer ran the mighty Bundesbank from 1993 to 1999, a period that straddled the aftermath of German reunification as well as the launch of the single European currency and the creation of the European Central Bank.

“Hans Tietmeyer was an outstanding president, who always acted with the goal of monetary stability in mind,” current Bundesbank chief Jens Weidmann said in a statement.

“Our thoughts and sympathies go out to his family.”

Tietmeyer died on Tuesday, the statement added, without giving further details.

A fierce defender of the independence of central banks, Tietmeyer was credited with ensuring that the same principle was enshrined in the statutes of the ECB, which was modelled in large part on the Bundesbank and is likewise based in Frankfurt.

Before joining the Bundesbank, Tietmeyer was a junior finance minister and served as an advisor to former chancellor Helmut Kohl.

Seen as one of the architects of the European monetary union, the influential Tietmeyer was known for speaking his mind and cautioned early on of the pitfalls of the single currency.

He notably warned that some member states had to show greater budgetary discipline if trouble was to be avoided down the road – comments that would prove prescient during the eurozone debt crisis.

But Tietmeyer also credited the euro with shielding member states from foreign exchange turmoil at the height of the global financial crisis.

“We would probably have had a series of currency crises” that could have hammered some countries had they kept their national monies, Tietmeyer told AFP in late 2008.

“As a result, the single currency has without doubt benefited the people and the economy of Europe,” he said.

European Commission chief Jean-Claude Juncker said he was “deeply saddened” by Tietmeyer's death.

“Europe, the euro and I personally lose an important companion,” he said.

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ECB

Inflation rose in Germany in December: report

Inflation in Europe's largest economy Germany clambered higher in December, official data showed Friday, but remained short of the European Central Bank's target for the 19-nation eurozone.

Inflation rose in Germany in December: report
Prices in Germany are rising, but not as fast as they should be. Photo: Jens Büttner / zb / dpa
Price growth hit 1.5 percent year-on-year last month, statistics authority Destatis said, some 0.4 percentage points higher than in November.
   
And it reached the same level when measured using the Harmonised Index of Consumer Prices (HICP) yardstick preferred by the ECB.
   
But while German price growth was headed in the right direction, it was still well short of the ECB's just-below-two-percent goal. Over the full year 2019, inflation averaged just 1.4 percent.
   
“There is little sign of sustained growing price pressure that could prompt the ECB to rethink its ultra-expansive monetary policy,” said economist Uwe Burkert of LBBW bank.
 
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Here's a graph put together by the German newswire DPA, showing how the inflation rate in Germany has fluctuated between 2008 and 2019. 
 
 
 
The ECB has set interest rates at historic lows, granted hundreds of billions of euros in cheap loans to banks, and bought more than 2.6 trillion euros ($2.9 trillion) of bonds in efforts to keep credit flowing to the economy, stoking growth and inflation.
   
But it has fallen short of its eurozone-wide price growth target for years, predicting last month it would inch up to just 1.6 percent by 2022.
   
Economists have pointed to both uncertainty over political events, like trade wars and Brexit, and long-term developments like ageing populations as possible reasons for sluggish growth and inflation.
   
Under new chief Christine Lagarde, the ECB plans to launch a wide-ranging “strategic review” this year, its first since 2003, that could adjust its tools or even reexamine the inflation target itself.
   
In the meantime, she has urged countries — like Germany — with sound government finances to lift spending in hopes of juicing the economy.
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