Isabel Schnabel: Interview with Der Spiegel

Interview with Isabel Schnabel, Member of the Executive Board of the ECB, conducted by Tim Bartz and Stefan Kaiser on 1 April and published on 9 April 2021, in print on 10 April 2021

• In the United States, the cyclically adjusted price/earnings ratio is now higher than it was before the financial crisis of 2008.
• Have equity and real estate prices reached such heights again that they are bound to implode at some point?
• The collapse of the US hedge fund Archegos has just generated multi-billion losses for large banks such as Credit Suisse and Nomura.
• There is a need to scrutinise the reasons why the banks enabled the fund to leverage up to such an extent.
• The institutions thought that their loans were collateralised by the equity stakes held by Archegos.
• But as the fund was forced to sell these stakes quickly and the prices were plummeting, the collateral was no longer worth much.
• We can be glad that the effect has been limited to just a few players.
• That sounds as if the financial sectors avoidance of more serious consequences was more down to luck than good judgement.
• It is thanks to regulation that the banks have sufficient capital to cushion losses of that nature.
• But more is to be done when it comes to funds, because their regulation is predominantly geared towards protecting investors.
• Nonetheless, it is a warning signal that there are considerable systemic risks that need to be better regulated.
• Are you worried about the prospect of a new, hitherto unregulated currency emerging alongside the euro, dollar and the like?
• In our view it is wrong to describe bitcoin as a currency, because it does not fulfil the basic properties of money.
• What really matters, though, is that the European economy takes off again, in which case the debt will also be manageable.
• All decision-makers, and that includes the ECB, need to ask themselves what they can contribute within their respective mandates.
• First, climate change has a massive impact on the economy, due to natural disasters for instance, and hence also on price stability.
• And second, the ECBs mandate requires it to support the EUs economic policy, in which climate protection plays a leading role.