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Dr Jörg Kukies, State Secretary for Financial Market Policy and European Policy, Federal Ministry of Finance, Germany

By Toby Fildes
15 Jun 2020

Dr Jörg Kukies, State Secretary for Financial Market Policy and European Policy at the German Federal Ministry of Finance, speaks to GlobalCapital’s Managing Editor, Toby Fildes, on Covid-19, European policy and Germany’s financial markets.

Germany weathers Covid storm



Germany has weathered the Covid-19 storm well, with much less impact than its European counterparts. In recent years, Germany has been criticised for not spending enough, however it seems to have worked in the country’s favour. The fiscal capacity it has built up allows it to spend in times of need, says Kukies, making Germany more resilient to economic shocks.

In an interview on June 2, Kukies said financial markets had been well behaved during the pandemic. The severity of the economic impact led initially to sell-offs, as expected.

However, Kukies was sceptical on whether introducing joint European bonds or ‘corona bonds’ would create the right incentives. Even if Germany took part, it would be unlikely that the bonds would be ready in time to fix all the problems that urgently require solutions. 

Fildes also asked Kukies about prospects for consolidation in the German banking system after the recovery. “It’s a decision the banking industry itself has to take,” he replied. “We don’t push for mergers, we don’t push for consolidation, we push for sound capital ratios and business models. We certainly wouldn’t put pressure on institutions to make business decisions one way or another.”

As economies start to move towards recovery, there is talk of making the recovery green. This is very much on Kukies’ agenda. Germany’s new fiscal package pays a lot of attention to future investment incentives and carbon footprint measures.

Despite much of the attention being on Covid during this time, Brexit is still looming. As the UK prepares to leave the EU, a fairly hard Brexit seems inevitable now. Kukies believes the negotiations are in good hands with Michel Barnier and his team at the European Union. However, the lack of progress is concerning for Germany, especially given that it will assume its presidency of the European Council in a few weeks’ time.

By Toby Fildes
15 Jun 2020