| BUSINESSWEEK ONLINE : SEPTEMBER 6, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN COVER STORY
Germany's Point Man for Finance (int'l edition) Ernst Welteke will take office as president of Germany's Bundesbank on Sept. 1, a post that will also give him a voice at the European Central Bank and a key role in setting monetary policy for the 11 countries in the euro zone. The 56-year-old Welteke is currently president of the Bundesbank branch for the state of Hesse, where Frankfurt looms large as Germany's financial hub. He is also a member of the board of directors of Finanzplatz, which promotes Germany's financial-services industry. Welteke recently spoke with Frankfurt Bureau Chief Jack Ewing. Q: Will Frankfurt overtake London as a financial center? A: I don't think there will be one finance capital in Europe. There will be several with different specialties. London has fundamental advantages, including language and size. I consider it improbable that Frankfurt will overtake London as a financial center. On the Continent there will always be competition between Paris and Frankfurt, and with smaller financial centers like Milan or Madrid. Q: Does electronic technology present a threat to traditional financial centers? A: The Internet and E-commerce mean that places won't be as important as networks. At the same time, I think the people who sift information must get together somewhere. The fact that the ECB is located in Frankfurt hasn't attracted a lot of new banks. But the information service providers have come--news agencies, rating services.... Naturally, Frankfurt will profit if the euro develops further as a reserve currency and investment medium. Q: Has the government helped promote financial markets? A: In the last three years, we have had three capital-market reform laws. The supervision of securities trading through the prohibition of insider trading has improved substantially. [But] we can't stand still. Other reforms are necessary, such as encouraging pension funds to promote stock ownership. Stock ownership in Germany is far behind the Anglo-Saxon countries. Q: What about measures to improve labor market flexibility? A: It's not easy to get rid of a worker who's no longer doing his work well. Reforms are necessary. But we also have to be careful we don't go too far. We can't simply adopt the American hire-and-fire model. But perhaps we should be more generous in making exceptions. Q: Do Germany's high income taxes discourage businesspeople from coming to Frankfurt? A: People look at the top tax rates. But if you look at disposable income and the cost of living, and compare with London, I really doubt that Frankfurt comes out worse. Q: Can significant reforms be expected from the current government? A: The current finance minister [Hans Eichel] knows the needs of the financial center. Economics Minister Werner Muller has signaled his support for the financial industry. Whether the government can put through all the reforms that are necessary, we'll see in the coming months. The new government inherited a huge reform backlog. Crucial from my point of view is to reduce the growth of public debt, simply in order to have a little room to maneuver. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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