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We examine the causal relationship between US monetary policy shocks, exchange rates and currency excess returns for a sample of eight advanced countries over the period 1980M1 to 2022M11. We find that the dynamics of the US dollar exchange rate is the main driver of currency excess returns. The exchange rate is significantly affected by US monetary policy shocks, where the persistence of this shock is important, as well as by an external shock. This external shock is strongly related to global risk aversion and the convenience yield that investors are willing to pay for holding US Dollar assets. A significant part of the response of excess currency returns is also expected, suggesting a violation of the UIP. Focusing only on the post-crisis period, the impact of both the external shock and the inflation targeting shock on exchange rates and currency excess returns disappears in the cross-section.

DIW Wochenbericht

Im August 2022 hat der US- Kongress ein umfangreiches Bundesgesetz, den Inflation Reduction Act (IRA), verabschiedet, das der US-Wirtschaft zu mehr Wachstum und Resilienz verhelfen soll. Es ist ein massives staatliches Investitions- und Ausgabenprogramm in den Sozialstaat, in die bundesweite Infrastruktur und in den Klima- und Umweltschutz in Höhe von geschätzt rund 430 Milliarden Dollar. Gleichzeitig soll es die Vormachtstellung der USA als größten Energieproduzenten langfristig sichern, die Reindustrialisierung der US-Wirtschaft unterstützen sowie eine starke Antwort auf Chinas wirtschaftliche und technologische Hegemonialbestrebungen geben. Die Ausgestaltung des Programms setzt enorme Anreize und gibt teils Verpflichtungen vor, Produktion in die USA zu verlagern. Diese Local-Content-Klauseln können sich stark auf die europäische Wirtschaft auswirken, wenn Produktion aus der EU in die USA verlagert wird. Dies verlangt strategische wirtschaftspolitische Antworten, die die EU teilweise schon angekündigt hat, zum Beispiel bei der Lockerung ihrer Subventionsregelungen. Aber auch an anderen Stellen müsste sie noch dringend nachjustieren, vor allem bei der sicheren Versorgung mit kritischen Rohstoffen., DIW Wochenbericht

In August 2022, the US Congress passed the Inflation Reduction Act (IRA), a comprehensive piece of legislation aiming to stimulate the US economy and to increase its resilience. At an estimated 430 billion euros, it is a massive government investment and spending program in the welfare state, federal infrastructure, climate action, and environmental protection. At the same time, the IRA is intended to secure the USA’s leading position as the largest energy producer in the long term, to support the reindustrialization of the US economy, and to provide a strong response to China’s economic and technological hegemonic aspirations. The program’s design provides enormous incentives and, in some cases, imposes obligations to relocate production to the US. These local content requirements can have a significant impact on the European economy if production is moved from the EU to the US. The IRA requires strategic economic policy responses that the EU has partially already announced, such as easing state aid rules. However, it must also make urgent changes in other areas, especially in the security of supply of critical raw materials., DIW Weekly Report

Since the beginning of 2022, monetary policy in the euro area has been gradually normalizing. As a result, bond yields of highly indebted countries such as Italy and Greece are rising more sharply than those of countries with less debt, such as Germany, a development referred to as bond market fragmentation. To ensure the coherent effectiveness of monetary policy on economic developments and, ultimately, price developments in all euro area Member States, the Governing Council of the European Central Bank announced the Transmission Protection Instrument (TPI) in July 2022. The TPI intends to make it possible to selectively purchase government bonds from countries whose interest rate increases are not considered to be justified by macroeconomic fundamentals, thus preventing a disorderly divergence in interest rate levels between countries. This Weekly Report analyzes the economic and legal aspects of this new monetary policy instrument. Estimates from the empirical model show that current yield spreads between government bonds of euro area member states cannot yet be justified as disorderly; rising yields can be explained by a worsening of macroeconomic fundamentals and stricter general risk assessments. Therefore, the requirements for activating the TPI have not yet been fulfilled. In addition, TPI raises concerns from a legal perspective., DIW Wochenbericht

Since the beginning of 2022, monetary policy in the euro area has been gradually normalizing. As a result, bond yields of highly indebted countries such as Italy and Greece are rising more sharply than those of countries with less debt, such as Germany, a development referred to as bond market fragmentation. To ensure the coherent effectiveness of monetary policy on economic developments and, ultimately, price developments in all euro area Member States, the Governing Council of the European Central Bank announced the Transmission Protection Instrument (TPI) in July 2022. The TPI intends to make it possible to selectively purchase government bonds from countries whose interest rate increases are not considered to be justified by macroeconomic fundamentals, thus preventing a disorderly divergence in interest rate levels between countries. This Weekly Report analyzes the economic and legal aspects of this new monetary policy instrument. Estimates from the empirical model show that current yield spreads between government bonds of euro area member states cannot yet be justified as disorderly; rising yields can be explained by a worsening of macroeconomic fundamentals and stricter general risk assessments. Therefore, the requirements for activating the TPI have not yet been fulfilled. In addition, TPI raises concerns from a legal perspective.

DIW Wochenbericht

DIW Wochenbericht

DIW Wochenbericht

Headline inflation in the euro area jumped to more than three percent in the summer after years of relatively low inflation rates well below the target of close to but below two percent set by the ECB until July 2021. One of the main reasons for the rise in inflation is the increase in energy prices since the beginning of 2021. However, there are further indications that inflation in the euro area will remain elevated in the coming months. This report analyzes the factors that could have an impact on inflation. However, most of these factors, such as the fiscal stimulus and pent-up demand only have temporary effects. Others, such as the unemployment gap, weigh less severely than expected. A change in inflation expectations, which could trigger a wage-price spiral, poses the main risk for a prolonged period of elevated inflation. While these expectations are still in line with the inflation target, the ECB should keep a critical eye on their development and, if necessary, take decisive action to maintain its credibility., DIW Weekly Report

Die Gesamtinflation im Euroraum ist im Sommer sprunghaft auf mehr als drei Prozent gestiegen – nach Jahren mit relativ geringen Teuerungsraten von deutlich unter der von der EZB bis Juli 2021 angestrebten Zielmarke von knapp unter zwei Prozent. Ein Hauptgrund für die anziehende Inflation sind zum einen die seit Jahresbeginn steigenden Energiepreise. Aber es gibt noch weitere Anhaltspunkte, die darauf hindeuten, dass die Inflation im Euroraum auch in den kommenden Monaten erhöht bleiben wird. Der vorliegende Bericht analysiert die Faktoren, die einen Einfluss auf die Inflation haben könnten. Die meisten dieser Faktoren – wie die Produktionslücke oder die Konsumneigung – haben jedoch nur eine vorübergehende Wirkung. Andere, wie die Arbeitslosenlücke, wiegen bei genauerer Analyse weniger schwer als erwartet. Ein Hauptrisiko für eine anhaltend hohe Inflation ist eine Veränderung der Inflationserwartungen, die eine Lohn-Preis-Spirale auslösen könnten. Noch sind diese Erwartungen im Einklang mit dem Inflationsziel der EZB. Die europäische Notenbank sollte deren Entwicklung kritisch beobachten und gegebenenfalls entschlossen gegensteuern, um ihre Glaubwürdigkeit zu wahren., DIW Wochenbericht

As the coronavirus pandemic spread across the globe in early 2020, the European Central Bank as well as national governments in the euro area enacted or announced numerous economic policy measures to counteract the severe economic consequences of the resulting lockdowns. In this paper, the immediate effect of the announcements on government bond and stock markets are estimated in a panel study. The results show that the ECB’s monetary policy measures barely had a stabilizing effect on the financial markets in the short term. With the exception of the announcement of Germany’s Economic Stabilization Fund, the fiscal rescue packages of other national governments and the EU did not lower government bond yields. In contrast, suspending fiscal rules and relaxing banking regulations had a calming effect on the markets, especially the government bond markets. In conjunction with fiscal policy measures, EU-wide measures in particular, they were able to stabilize the stock markets. Overall, the results show that policy action on the part of individual governments is not sufficiently effective on its own. To be effective, measures must be taken by Member States together. A joint crisis mechanism, such as the European Recovery Plan announced by the EU, could be quite efficient., DIW Weekly Report

Um die Auswirkungen der Corona-Krise abzufedern, haben die Zentralbanken weitreichende geldpolitische Maßnahmen ergriffen. Die US-amerikanische Federal Reserve hat ihre Zinsen gesenkt und ebenso wie die Europäische Zentralbank ihre Anleihekaufprogramme ausgeweitet. Fraglich ist, ob diese Maßnahmen den gewünschten Effekt haben, also die Märkte beruhigen und die Realwirtschaft stützen. Zwar lassen sich die gesamtwirtschaftlichen Wirkungen derzeit noch nicht beziffern. Erste Indizien für die Wirksamkeit lassen sich aber an den kurzfristigen Reaktionen von Aktienkursen und Anleiherenditen ablesen. Der folgende Beitrag zeigt auf, wie Zinsen und Kurse unmittelbar auf die Ankündigungen der Zentralbanken reagiert haben und welche Schlüsse sich daraus für zukünftige Maßnahmen ableiten lassen.

The use of futures exchange contracts instead of forwards completes the maturity spectrum of the correlation between the spot yield and the premium. We find that the forward premium puzzle (FFP) depends significantly on the maturity horizon of the futures contract and the choice of sampling period. The FFP appears to be a pre-crisis phenomenon and is only observed for maturities longer than about one month. When examining whether the observed excess returns of futures contracts represent a fair compensation for currency risk, we find that non-durable consumption risk and market risk can explain excess currency returns. But only in the pre-crisis period and when the maturity of the assets is longer than about three months.

To cushion the economic effects of the coronavirus pandemic, central banks havetaken far-reaching monetary policy measures. The US Federal Reserve has loweredits interest rates and, like the European Central Bank, has expanded its bond pur-chase programs. However, it is questionable whether these measures are having thedesired effect of calming the markets and supporting the real economy. It is truethat the macroeconomic effects cannot yet be quantified, but initial indications oftheir effectiveness can be seen in the short-term reactions of stock prices and bondyields. The following article shows how interest rates and prices have reacted direct-ly to the central bank announcements and what conclusions can be drawn from thisfor future measures.

We quantify the causal link between exchange rate movements and sovereign risk of 16 major emerging market economies (EMEs) by means of structural vector autoregressive models (SVARs) using data from 10/2004 through 12/2016. We apply a novel data based identification approach of the structural shocks that allows to account for the complex interrelations within the triad of exchange rates, sovereign risks and interest rates. We find that the direction and size of the response of sovereign risk to FX rate movements depend on the type of exchange rate measure we look at and on the size of the net foreign currency exposure of an economy. A depreciation of the domestic currency against the USD increases sovereign risk. In contrast, a depreciation of the effective exchange rate turns out to have only a significant effect on sovereign risk for countries with large negative net foreign currency exposures of the private sector. In this case, a depreciation of the NEER also induces an increase in sovereign risk. We conclude that the 'financial channel' is more important in the transmission of exchange rate shocks to sovereign risk in comparison with the traditional 'net trade channel'.

We analyse the first twenty years of the euro both from an economic and an institutional perspective. We find that in particular during the period since the financial crisis, convergence as measured by a variety of indicators has not improved. Design flaws in the Eurozone institutional architecture have contributed importantly to this lack of convergence. This is why further reforms are urgently needed. This policy contribution was prepared for the European Parliament Committee on Economic and Monetary Affairs ahead of the European Parliament's Monetary Dialogue in January 2019.

DIW Wochenbericht

Using exchange rates futures instead of forwards completes the maturity spectrum of the correlation between the spot return and the premium. The correlation decreases with increasing maturity, presumably due to a latent risk premium. We hypothesize that the influence of the unobserved risk factor has a contract-specific risk component. Our main contribution is to control for the omitted variable bias by using a modified version of the CCE panel estimator in combination with futures data. This renders the coefficient on the futures premium insignificantly different from one. Subsequently, the contract-specific part is related to conventional proxies of risk.

While negative interest rates stimulate the real economy by enhancing credit supply and improving the wealth situation of firms and households, they might come with side effects with regard to banking and financial stability. In an assessment of the trade-off between the ability of a central bank to use negative policy rates to signal lower future deposits rates, against the potential costs on bank profitability, we find that the signalling effect dominates. Thus, a negative interest rate policy is an effective monetary policy tool, even when deposit rates are bound by zero.

In this policy brief, we argue that the financial innovations triggered by the FinTech industry have the potential to affect the transmission of monetary policy as well as the informational content of important monetary indicators. The growing FinTech industry could contribute substantially to the emergence of nonbank finance as a substitute for traditional commercial bank finance. While the overall effect of nonbank finance on monetary policy transmission is not yet clear, we argue that regulators and policy makers need to closely monitor the potential effects of FinTech on monetary policy transmission and to adequately adjust financial sector regulation.

Inflation in the euro area has been below the European Central Bank's target for almost a year now and it is also expected to remain at a very low level in the near future. On the one hand, such a low level of inflation is not in line with the ECB's objective. On the other hand, there is the risk that this situation will lead to a slide into deflation. In view of the ECB's historically low policy rates, the question arises as to which monetary policy options are available. In order to counteract possible deflation, primarily unconventional measures remain open to the ECB, such as outright purchases of securities. But the onus is also on fiscal and economic policy to actively address low inflation and the risks of deflation.

Member countries of the euro area, and the peripheral states in particular, face an especially difficult problem: on the one hand, they urgently need stronger economic growth to reduce high debt and unemployment levels. On the other hand, however, they have no scope to use fiscal policy to stimulate the economy. One way to strengthen economic growth without burdening public finances might be to implement a “fiscal devaluation.” This concept includes reducing social security contributions for employers—and therefore ancillary wage costs—making companies more price competitive than their foreign competitors. This, in turn, should stimulate exports and result in positive employment effects. Reducing ancillary wage costs could be financed by an increase in value-added tax. This study shows that a fiscal devaluation in the individual member countries of a currency union may help to boost economic growth in the short term. This instrument should therefore be particularly important for the crisis countries in the euro area, though it by no means replaces the structural reforms required to increase economic growth in the long term.

Die Mitgliedsländer der Eurozone, vor allem die sogenannten Peripheriestaaten, stehen vor einem schwer zu lösenden Problem: Einerseits benötigen sie dringend ein stärkeres Wirtschaftswachstum, um die aufgebauten Schuldenberge abtragen und die Arbeitslosigkeit reduzieren zu können, verfügen aber andererseits über keine fiskalpolitischen Spielräume zur Stimulierung ihrer Wirtschaft. Eine Möglichkeit, das Wirtschaftswachstum zu stärken, ohne die öffentlichen Haushalte zu belasten, könnte eine ,,fiskalische Abwertung"sein. Dabei werden die Sozialabgaben der Arbeitgeber - und damit die Lohnnebenkosten - gesenkt, um die preisliche Wettbewerbsfähigkeit der Unternehmen gegenüber ihren ausländischen Konkurrenten zu verbessern. Dadurch sollen die Exporttätigkeit angeregt und positive Beschäftigungseffekte erzielt werden. Finanziert wird die Reduzierung der Lohnnebenkosten durch eine Erhöhung der Mehrwertsteuer. Die vorliegende Untersuchung zeigt, dass fiskalische Abwertungen einzelner Mitgliedsländer einer Währungsunion dazu beitragen können, den Handelsbilanzsaldo und damit das Wirtschaftswachstum dort in der kurzen Frist zu stabilisieren. Daher dürfte dieses Instrument gerade für die Krisenländer der Eurozone von Bedeutung sein. Es ersetzt aber keineswegs die Umsetzung von Strukturreformen, die erforderlich sind, um das Wirtschaftswachstum auch langfristig zu erhöhen. Member countries of the euro area, and the peripheral states in particular, are faced with an especially difficult problem: on the one hand, they urgently need stronger economic growth to pay off the mountains of debt they have accrued and have to reduce unemployment but, on the other hand, they have no scope to use fiscal policy to stimulate the economy. One wayto strengthen economic growth without burdening public finances could be "fiscal devaluation". This reduces social security contributions for employers - and therefore ancillary wage costs - leading to companies being more price competitive than their foreign competitors. This, in turn, should stimulate exports and result in positive employment effects. Reducing ancillary wage costs could be financed by an increase in value-added tax. The present study shows that fiscal devaluation in the individual member countries of a currency union may help to stabilize economic growth in the short term. Therefore, this instrument should be particularly important for the crisis countries of the euro area though it by no means replaces the implementation of structural reforms required to increase economic growth in the long term.

While many countries in the euro area are deep in recession due to a debt and structural crisis, the German economy appears to have excelled compared to many other euro area countries. Unemployment has fallen to the lowest level since German reunification, economic output has grown by over eight percent since 2009, and public budgets have been consolidated, generating a surplus in 2012. But this is no cause for euphoria. On the contrary, if one looks at Germany's economic development from a more long-term perspective, we can see that the country is lagging behind in many areas compared to most EU member states and most euro area countries. Since 1999, the euro area countries have on average achieved more economic growth than Germany and this increase in competitiveness can be largely attributed to wage moderation rather than productivity growth. The rate of investment has been falling for a long time and is very low by international standards. The estimations in this study indicate that Germany has had an annual investment gap of three percent of GDP, on average, since 1999. This means that Germany needs to invest substantially more in order to reduce the investment backlog accumulated in recent years and also to ensure higher potential growth and prosperity in the long term.

Während manche Länder in der Europäischen Währungsunion aufgrund von Schulden- und Strukturkrisen tief in der Rezession stecken, steht die deutsche Wirtschaft derzeit glänzend da. Die Arbeitslosigkeit ist auf den niedrigsten Stand seit der Wiedervereinigung gefallen, die Wirtschaftsleistung ist seit 2009 um mehr als acht Prozent gewachsen und die öffentlichen Haushalte wurden konsolidiert und erwirtschafteten im Jahr 2012 einen Überschuss. Dies ist jedoch keineswegs ein Grund zu Euphorie, im Gegenteil: Betrachtet man die wirtschaftliche Entwicklung Deutschlands aus einer längerfristigeren Perspektive, so zeigt sich, dass das Land im Vergleich zu den meisten EU-Ländern und vielen Euroländern in einigen Bereichen zurückgeblieben ist. Seit 1999 haben die Euroländer im Durchschnitt mehr Wirtschaftswachstum erzielt als Deutschland, und ein großer Teil der erstarkten Wettbewerbsfähigkeit ist auf Lohnzurückhaltung anstatt auf Produktivitätszuwächse zurückzuführen. Die Investitionsquote war längere Zeit rückläufig und ist im internationalen Vergleich niedrig. Die Berechnungen in dieser Studie zeigen, dass Deutschland im Durchschnitt der Jahre 1999 bis 2012 eine Investitionslücke von jährlich drei Prozent des Bruttoinlandsprodukts aufgewiesen hat. Das heißt, es fehlten rund 75 Milliarden Euro pro Jahr. Deutschland hat also einen hohen Investitionsbedarf, um den in den letzten Jahren aufgestauten Investitionsrückstand abzubauen und auch, um langfristig Wachstum und Wohlstand zu sichern. Gleichzeitig ist die gesamtwirtschaftliche Sparquote in Deutschland im internationalen Vergleich mit am höchsten. Wie sich an den ernormen Leistungsbilanzüberschüssen von bis zu sieben Prozent des Bruttoinlandsprodukts ablesen lässt, floss das Ersparte jedoch zu großen Teilen ins Ausland, anstatt in Deutschland investiert zu werden. Insgesamt hat Deutschland damit erhebliche Wachstumschancen verpasst. Seit 1999 haben deutsche Investoren rund 400 Milliarden Euro auf ihr Auslandsvermögen verloren, was etwa 15 Prozent des Bruttoinlandsprodukts entspricht. Allein im Zeitraum 2006 bis 2012 waren es 600 Milliarden Euro, beziehungsweise 22 Prozent des Bruttoinlandsprodukts. Berechnungen des DIW Berlin in dieser Studie zeigen, dass das deutsche Pro-Kopf-Wirtschaftswachstum unter sonst gleichen Bedingungen jährlich um fast einen Prozentpunkt höher gewesen wäre, wenn die Investitionsquote in den vergangenen 15 Jahren dem Durchschnitt im Euroraum entsprochen hätte. Deutschland ist zudem stark auf forschungsintensive Industrien und wissensintensive Dienstleistungen spezialisiert. Diese Bereiche stellen hohe Anforderungen an Humankapital, Ressourcenschonung und Mobilität und weisen somit einen besonders hohen Investitionsbedarf auf. Simulationen zeigen, dass ein Anstieg der Investitionsquote auf den langjährigen OECD-Durchschnitt zu deutlich höherem Wirtschaftswachstum in Deutschland führen würde. Das Potentialwachstum könnte 2017 um 0,6 Prozentpunkte höher sein; statt bei rund einem Prozent läge es bei 1,6 Prozent. Und auch die Reallöhne dürften durch eine kräftigere Investitionstätigkeit ansteigen. Angesichts günstiger Finanzierungsbedingungen und entlasteter öffentlicher Finanzen in den kommenden Jahren sind die finanziellen Spielräume für private und öffentliche Investitionen derzeit äußerst günstig und sollten jetzt genutzt werden. While many countries in the European Monetary Union are deep in recession due to a debt and structural crisis, the German economy appears to have excelled compared to many other euro area states. Unemployment has fallen to the lowest level since German reunification, economic output has grown by over eight percent since 2009 and public budgets have been consolidated, generating a surplus in 2012. But this is no cause for euphoria. On the contrary, if we look at Germany's economic development from a more long-term perspective, we can see that this country is lagging behind in many areas compared to most EU member states and most euro countries. Since 1999, the euro countries have on average achieved more economic growth than Germany and this increase in competitiveness can be largely attributed to wage moderation rather than productivity growth. The investment rate has been falling for a long time and is still low by international standards. The calculations in this study indicate that Germany has shown an annual investment gap of three percent on average since 1999. This means that Germany needs to invest in order to reduce the deficit accumulated in recent years and also to ensure growth and prosperity in the long term. At the same time, the savings rate in Germany is one of the highest by international standards. As evidenced by the enormous current account surpluses of up to seven percent in 2012, most of the savings went abroad, however, rather than being invested in Germany. Overall, Germany has thus missed out on significant growth opportunities. Since 1999, German investors lost around 400 billion euros on their foreign assets, which corresponds to approximately 15 percent of GDP. In the period from 2006 to 2012 alone, this figure was 600 billion euros, or 22 percent of GDP. At the same time, Germany shows an average investment gap of around 75 billion euros each year. Calculations by DIW Berlin for the purposes of this study indicate that if the German investment gap had been closed annual German economic growth per capita could have been up to one percentage point higher on average than observed in reality. Germany also has a high degree of specialization in research-intensive industries and knowledge-intensive services. As a prime location with high requirements concerning human capital, conservation of resources, and mobility, the country has a particularly high demand for structural capital investment. Simulations show that closing the investment gap in the medium term could lead to significantly higher economic growth in Germany. Potential growth could be 0.6 percentage points higher in 2017: at 1.6 percent of GDP as opposed to around one percent. In light of more favorable financing conditions and fewer burdens on public finances in the coming years, the financial scope for private and public investment is currently extremely favorable and good use should be made of it now.

Neben der Durchführung geldpolitischer Operationen nehmen die nationalen Zentralbanken des Eurosystems eine Reihe von nationalen Aufgaben in eigener Verantwortung wahr. Dazu zählt auch die Verwaltung ihrer Portfolios. Damit dies nicht in Konflikt mit der Durchführung der gemeinsamen Geldpolitik gerät, gibt das "Agreement on Net Financial Assets" (ANFA) den nationalen Zentralbanken eine Obergrenze für ihre Nettofinanzanlagen (NFA) vor. Ankäufe von Staatsanleihen im Rahmen des ANFA haben in der Öffentlichkeit zu dem Vorwurf geführt, dass dies eine verdeckte Finanzierung fiskalischer Defizite durch die "Druckerpresse" der nationalen Notenbanken darstelle. Dieser Bericht erläutert zunächst die NFA-Vereinbarung und zeigt auf, in welchem Umfang verschiedene nationale Zentralbanken Wertpapierkäufe im Rahmen des ANFA getätigt haben. Darauf aufbauend wird der Frage nachgegangen, inwiefern der Vorwurf monetärer Staatsfinanzierung gerechtfertigt ist. Auch wenn es Anzeichen dafür gibt, dass einige Nationalbanken in den letzten Jahren die Bestände an Staatsanleihen in ihren Bilanzen ausgeweitet haben, reicht dies nicht aus, um eine verdeckte monetäre Haushaltsfinanzierung zu belegen. Die öffentliche Debatte über das NFA-Abkommen weist allerdings auf ein deutliches Transparenzdefizit des Eurosystems, insbesondere der nationalen Notenbanken, hin. Um das Vertrauen in die europäische Geldpolitik nicht zu gefährden und Transparenz sowie Kommunikation zu verbessern, sollten Informationen über die Bilanzentwicklung der nationalen Zentralbanken detaillierter und regelmäßiger veröffentlicht werden. As well as implementing the common monetary policy, the national central banks (NCBs) which, together with the European Central Bank (ECB) form the Eurosystem, are also responsible for performing a range of national tasks. Among other things, these include the management of their financial assets portfolios. To ensure that this function does not interfere with the implementation of the single monetary policy, the Agreement on Net Financial Assets (ANFA) limits the total net amount of financial assets (NFA) the NCBs are permitted to hold. National central bank purchases of government bonds under ANFA have led to public accusations that this was tantamount to covert monetary financing of fiscal deficits through the "printing press" by the national central banks. The present report first explains the Agreement on Net Financial Assets and shows the volume of securities purchased by the different NCBs under ANFA. Based on this, it examines the extent to which the accusation of monetary financing may be justified. Although there have been indications of certain national banks increasing the government bond holdings on their balance sheets in recent years, this does not provide sufficient evidence of monetary financing. However, the public debate on ANFA clearly highlights the Eurosystem's lack of transparency, particularly that of the NCBs. To ensure that confidence in European monetary policy is not undermined and both transparency and communication are improved, more detailed information on the development of NCBs' balance sheets must be published more regularly.