Germany’s central bank has abandoned its bid to introduce a central register of every loan taken out by Germans.
New European rules meant that the Bundesbank will soon have to register every loan exceeding €25,000, or $28,600. The European Central Bank’s idea is to give authorities a better overview of systemic risks and thereby help avoid a repeat of the 2008 financial crisis.
But, worried about an overheating housing market, Bundesbank boss Jens Weidmann had decided to take things a step further and register almost all loans. It announced a threshold of almost zero, forcing banks to report even the tiniest loans. But that triggered a storm of protest from German banks.
The Bundesbank has now backed down, telling the banking industry that it would apply the European Central Bank’s higher threshold after all.
In a letter to the German Banking Industry Committee, the umbrella organization for the banking sector, the Bundesbank said it would now stick “very closely” to the requirements of the ECB. “In particular it is not planned (…) to go below the reporting limit of €25,000 euros per debtor,” said the letter, which was first reported by “Börsen-Zeitung” newspaper and has been obtained by Handelsblatt.
It’s not the first time that Jens Weidmann, president of the Bundesbank, Germany’s central bank, has thought that the European Central Bank has failed to take a strong enough line. He has been a frequent and vocal critic of the ECB’s loose money policy to tackle the near total absence of price growth in the euro zone. And he had intended to go much further than the ECB in setting up a central credit register.