Keynote speech by Dr Jens Weidmann, President of the Deutsche Bundesbank, at the 24th Frankfurt European Banking Congress, in which he presented a central banker's view of the respective issues.
Without wishing to pre-empt the panel debate, Weidmann suggests that there is need to be cautious about declaring "mission accomplished".
Without doubt, the banking sector has needed to digest sizeable shifts in the regulatory environment. This obviously needs to be considered when banks are called upon to extend their loans to the private sector.
Bearing in mind the stricter capital requirements, it is not surprising that their repercussion on banks' activities make them wary when it comes to increasing their lending.
That being said, the weak credit dynamics in the euro area are also caused by the moderate economic recovery and the persistent need to deleverage in the banking sector and the non-bank sector. Hence, more than just favourable refinancing conditions will be needed to stimulate credit growth.
It is far more important to improve the longer-term revenue prospects of non-financial corporations. And it is important to improve sustainably job perspectives. Both can only be achieved through structural reforms which bolster competitiveness and boost economies' growth potential.
A prosperous economy needs healthy banks, but the opposite is just as true: healthy banks need a prosperous economy.
Full speech
© BIS - Bank for International Settlements
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