KREDIT und KAPITAL - Issue 3/2003


Contents


Articles

Stucken, Rudolf
Notenbank und Banken

Ehrlicher, Werner
Zur Neuordnung des Instrumentariums der Deutschen Bundesbank

Monissen, Hans G.
Geldversorgung und Kreditpolitik: Kritische Anmerkungen zur monetären Konzeption von Claus Köhler

Ketterer, Karl H. and Pohl, Rüdiger
Das Konzept der potentialorientierten Kreditpolitik. Zu einem kritischen Aufsatz von H. G. Monissen

Gebauer, Wolfgang
Die Determinanten des Zinsniveaus in der Bundesrepublik Deutschland. Ein Kommentar

Siebke, Jürgen and Willms, Manfred
Die Determinanten des Zinsniveaus in der Bundesrepublik Deutschland. Bemerkungen zu einem Kommentar


Reports

Burchardt, Michael
Die Stellung der einzelnen Bankengruppen am deutschen Geldmarkt


Book Reviews

Bauer, Ludwig
Leistungsveränderungen im Rahmen der Zielkonzeptionen öffentlich-rechtlicher deutscher Sparkassen (Bernd Küppers)

Jüttner, J.
Zur Geldtheorie Don Patinkins (Bernd Kitterer)


Summaries

Stucken, Rudolf
"The Central Bank and the Banks"

The author, who as far back as 1933 in the German bank inquiry strongly advocated the policy of variable minimum reserve rates - then a new instrument of central bank policy - has been prompted by the recent debate on further, differentiation of this instrument to reiterate his repeatedly expressed worries concerning present German monetary policy. He answers the question of whether we still have a meaningfully ordered monetary economy with a clear 'no'. This answer is derived from Walter Eucken's thesis that a competitive economy with individual freedom of the consumer, of saving and of investment is capable of functioning only on the basis of a rigorously, centrally controlled monetary policy. The author is of the opinion that the lack of monetary order leads to progressive destruction of our economic order. Although he has advocated for a long time that the central bank should be given the right to set credit ceilings, he is by no means of the opinion that our monetary system should be made functional again by making the instruments of central bank policy more stringent. On the contrary, the banks, as money-creating institutions, should become conscious of their responsibility for the entire economy and - instead of countering the central bank's monetary policy - support that policy. A uniform money supply policy could be achieved, asserts Stucken, either by the banks following the central bank's recommendations or by the central and commercial banks cooperating in monetary and banking policy by way of a gentlemen's agreement. The instrument of credit ceilings should merely be kept in the background, so to speak, to facilitate attainment of a voluntary consensus. It is the author's view that such cooperation is the only alternative to very incisive dirigistic solutions - if not nationalization of the banking system.

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Ehrlicher, Werner
"On the Reform of the Instrumentarium of the German Bundesbank"

The credit volume of the commercial banks continued to rise steeply in them Federal Republic of Germany even when the Bundesbank steered a stricter and persistent contractive course in past periods of restrictive policy, especially in the first half of 1973. This induced the Bundesbank to submit at the end of last year a proposal for extending its range of instruments, which is subjected to a critical analysis in the foregoing contribution. This contribution is divided into three parts. In the first section the mechanics of money-creation are ventilated as the theoretical foundation, the second part deals with the changes in the central bank's instrumentarium proposed by the Bundesbank, while in the third part these proposals are critically analysed.

1. In national economies organized on a market-economy basis, as a rule the banking system has a two-level structure. The central bank makes the legal tender available; the commercial banks provide the economy with credit. Since the credits granted by the commercial banks are partly called for in centralbank money, by way of its own creation of money - provided it has adequate mastery of the process - the central bank can control the entire supply of money and credit. Money creation by the central bank is based on three components: the foreign-trade, fiscal and refinancing components. In this connection a central bank's possibilities for exerting influence are limited as a rule to the refinancing component. Whereas a proposal of the Board of Experts for the Assessment of Overall Economic Trends aims at improving the possible influence on the refinancing component by intensified application of open market policy, the Bundesbank's proposal is directed not towards improved control of the creation of centralbank money, but towards the use made of centralbank money.

2. The reform proposals put forward by the Bundesbank can therefore be classified according to whether gaps in the present instrumentation are to be closed or whether intensified intervention is to be made possible. The extension of minimum reserve requirements to transactions or institutions not hitherto affected serves to close gaps. It is intended to achieve greater effectiveness of the instrumentarium by raising the maximum rates for present liabilities reserves, by introducing a reserve for asset growth, and by providing for possible imposition of credit ceilings.

3. The instruments are examined in the light of three criteria, namely the systematics of monetary policy instruments, efficiency, and compatibility with the market economy system. The study reaches the conclusion that the Bundesbank's proposed improvement of the instrumentarium does permit a more efficient monetary policy than hitherto, but must be judged critically with regard to its regulatory characteristics, since it permits the possibility of selective investment control. This finding leads to the fundamental question of whether it is possible within the framework of present relation between central bank and commercial banks to eliminate the undesiredly high elasticity of the credit supply in any way other than by measures which go beyond purely quantitative effects. This gives cause to consider the question with which the article closes (with a reference to the preceding contribution by Rudolf Stucken) of whether the relationship between the central bank and the credit banks should not be subjected to a fundamental reappraisal.

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Monissen, Hans G.
"The Supply of Money and Credit Policy: Critical Notes on the Monetary Conception of Claus Köhler"

Recent intensive examination of monetary problems has brought a significant expansion of our knowledge of behaviour structures in the monetary sector and of the interaction of the monetary with the real sector as well as of the consequences of stability-policy operations of central agencies. However, the research results presented by a small group of American economists (the so-called monetarists) have so far gained only incomplete acceptance, or only the basic approach has been accepted, in the German-speaking world.

One of the few attempts in the Federal Republic of Germany to develop a self-contained monetary and credit theory conception has been undertaken in the past few years by Claus Köhler and his co-workers. But Köhler's conception, which was popularized to a high degree in the German-speaking world, adopts a standpoint that is intentionally opposed to that of the monetarists. This, and to no slight extent the fact that Köhler's theoretical approach has become more and more the foundation for the activities of the Council of Experts, justify a systematic critical evaluation of his works and those of his former students.

This evaluation has been based on the following system:
1. Analysis of the structure of the monetary sector,
2. Transmission of monetary impulses, and
3. Effect of monetary policy measures.

The chief defect of the Köhler studies proved to be the lack of an overall model based on price theory that simultaneously covers the quantity of money, credit volume and the short and long term interest rates and unequivocally explains the transmission of policy impulses. Instead of such an analytical framework we find a large number of allusions to modalities and potentialities, and associatively interspersed, empirically often untenable statements which, in fact, are frequently reversed elsewhere. Such procedure gives the reader a leeway for subjective interpretation that is scarcely acceptable.

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Ketterer, Karl H. and Pohl, Rüdiger
"The Concept of Potential-Oriented Credit Policy on a critical essay by H. G. Monissen"

This article relates to a critical commentary published in this journal, in which H. G. Monissen expresses his views on the theoretical foundations of potential oriented credit policy, a liquidity-theory conception for central bank policy. It is shown that Monissen's criticism can be explained by a claim to theoretical exclusivity.

Monissen postulates that monetary policy measures exert an influence via stocks of wealth and wealth structure effects on nominal aggregate demand, and that hence evidence on causalities can be gained only from analysis of a structural model which describes the interrelationships of the various items of wealth and their association with the instruments of monetary policy.

Potential-oriented credit policy is a conception which assigns the central bank the task of controlling flows of payments. Underlying this is the view that flows are more easily controlled that stocks of wealth and that the existing credit-policy instruments are designed predominantly to influence money and credit flows. The intermediate objective of central bank policy is the flow magnitude of credit granting, which in turn, taking account of the disposition of non-bankers, acts via the existing quantity of money and determines the magnitude of the volume of payments, which in its turn is related to the nominal aggregate demand.

The concept is presented in condensed form. When considered in the light of systematic relationships Monissen's criticism proves to be untenable.

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Gebauer, Wolfgang
"The Determinants of the Interest Level in the Federal Republic of Germany - A Commentary"

The empirical results obtained by Siebke and Willms concerning the determinants of the level of interest rates in the Federal Republic of Germany are in the main untenable. Not only the fact that the extended test equation used by the authors on account of the interdependence of the "independent" variables permits no reliable isolation of a price expectation, an income and a liquidity effect plays a contributory part in reaching this judgment. Also the estimation of the individual effects themselves gives grounds for criticism. For example, this reviewer's own comparative calculations show that the price expectation effect under the empirical procedure selected by the authors extends over a markedly longer period of time. The scrutiny that was undertaken suggests - in agreement with more recent research results - that the "adaptive expectation hypothesis" used by Siebke and Willms as an approximation of the actual price expectations should be rejected. Theoretical and empirical alternatives are available for taking expectations into account.

In calculating the income effect, Siebke and Willms fail to take account of a time lag, although they expressly draw attention to the temporal aspect in their theoretical deliberations. Furthermore, the nominal gross national product used has an income and a price component and can therefore - in view of the simultaneous estimation of a price expectation effect - not be used alone for any unequivocal statement on the income effect.

In the case of the liquidity effect, too, the authors refrain from computing time lags. Therefore their comparative statements on the relative significance of the liquidity and the income effect over time are not convincing. Moreover, their measure of the liquidity effect, the nominal quantity of money, is empirically and theoretically vulnerable. This is confirmed by this reviewer's own calculations, which are more specifically based on conditions in the Federal Republic of Germany.

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Siebke, Jürgen and Willms, Manfred
"The Determinants of the Interest Level in the Federal Republic of Germany - Some remarks on a Commentary"

In this study it is shown that Gebauer's criticism of the author's theoretical-empirical work on determination of the interest level in the Federal Republic of Germany is essentially limited to the reiteration of theoretically unfounded conceptions of the German Bundesbank concerning monetary policy.

Since Gebauer formulates no hypothesis of his own on the price-expectation effect, his regression analysis cannot refute the author's results. Similarly, his empirical studies on the liquidity effect must be placed in the category of regressionism until such time as Gebauer presents a contradiction-free model of the effect of bank liquidity.

In a simple credit market model the authors demonstrate that, in contrast to the variables such as the quantity of money and volume of credit used by the authors, the free liquidity reserves proposed by Gebauer cannot be used to determine the liquidity effect. With the same model, however, it can be demonstrated that, gauged by the signs of directional changes, the adjusted central bank money reserve introduced by Gebauer possesses the same qualities as changes in the quantity of money.

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Reports

Burchardt, Michael
"The Position of the Various Banking Groups on the German Money Market"

In this context the term "money market" is used in the sense of dealings in central bank money between commercial banks for the purpose of liquidity adjustment. Only relatively few institutions take part in daily money market trading. A large proportion of day-to-day liquidity adjustments are carried out by way of internal money transactions through the system's own top institutions.

The differing positions of the various banking groups is attributable to different liquidity conditions, and the latter are due to the different clientele and business structures. A position on the money market is characterized by two things. Money market engagement (sum of money market claims and liabilities)and money market status (balance of money market claims and liabilities). For the money market engagement the decisive factor is the amplitude of liquidity fluctuations, while for the money market status it is the preponderance of fluctuation in one direction. The more one-sided the clientele structure and the shorter the terms of the business structure, the greater will the role of a banking group tend to be on the money market. In addition, however, certain peculiarities and liquidity conditions and special features of liquidity policy of the banking groups are also of significance.

The biggest money-lenderson the money market are the savings bank sector, the mortgage banks and the co-operative sector. The money market borrowers comprise mainly the regional banks and Private bankers, but frequently also the major banks.

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