High net foreign assets won't benefit Germany or global economy
ALEXANDRE Lamfalussy, the Belgian central banker whose death at the age of 86 was announced last week, used to relate how Karl Otto Pohl, president of the German Bundesbank in the crucial years 1980-91, sometimes hid his penchant for hard work under a veneer of apparent indolence.
One indication of Mr Pohl's capacity for industrious forward-thinking came in a letter that Mr Pohl (who died in December aged 85) sent as vice-president of the Bundesbank to Chancellor Helmut Schmidt in March 1978, supporting the need to prevent undue appreciation of the D-mark to protect German exports and jobs. This was part of behind-the-scenes exchanges over Mr Schmidt's plans for setting up the European Monetary System, the forerunner of monetary union.
Mr Pohl told the Chancellor that, during the 1970s, Germany's interests had switched towards holding down the excessive rise of its currency. "If the D-mark's high valuation against the dollar continues, then this might not only endanger our economic recovery but also give rise to structural changes (transfer of production facilities abroad) that could lead to permanent massive unemployment. We must therefore have an urgent interest in sharing the pressure of revaluation on as many shoulders as possible."
