October 24th 2016

Europe and the euro.

Carl-Ludwig Thiele, executive board member of the central bank of the Federal Republic of Germany, Frankfurt on the Main

Within the framework of the MCI Alumni & Friends lecture series, the Entrepreneurial School® welcomed Carl-Ludwig Thiele, member of the executive board of the Deutsche Bundesbank, the central bank of the Federal Republic of Germany, since 2010. The event was organized in collaboration with the Federation of Austrian Industries Tyrol, inviting its members to the Tyrolean Industry Talk.

Carl-Ludwig Thiele’s lecture ranged from the emergence of the euro and the present crisis of the currency union to possible measures to strengthen the euro area:

The European Monetary Union differs essentially from other currency unions. Although a common monetary policy exists, it is still paralleled by just as many fiscal policies as there are member countries, which are 19 at present. This combination of central monetary policy and decentral fiscal policy involves the danger of (mis)incentives, for example causing member states to accumulate excessive debt. Measures to prevent this kind of problem were agreed on in the Maastricht Treaty, which introduced indebtedness limits for individual countries and a non-liability clause to emphasize the responsibility of the individual member states for financial policy issues. Furthermore, central banks were prohibited from granting the member states direct loans. The currency union was, therefore, conceptualized as a stability union. Yet, it became evident that the framework defined by the Maastricht Treaty showed substantial weaknesses and failed to have the intended stabilizing and debt-limiting effects.

The crisis in the currency union has shaken the foundation of the currency union. Many of the emergency measures have undermined the principles of individual responsibility and liability. Only if this foundation is recreated can a currency union become a long-term union of stability. This can only be achieved by politics: decisive factors are competitive economic structures and solid national finances. Thus, Carl-Ludwig Thiele concluded his lecture with a Mark Twain quotation: “Always live within your income – even if you have to borrow to do so.”

Subsequent to the lecture, a lively discussion was moderated by MCI Rector Andreas Altmann.


>>> Speech Carl-Ludwig Thiele