Joachim Nagel: Fiscal policy challenges in a high inflation environment
Speech by Dr Joachim Nagel, President of the Deutsche Bundesbank, at the Forum Finanzpolitik und Steuerrecht, Baden-Baden, 10 November 2023.
The views expressed in this speech are those of the speaker and not the view of the BIS.
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1 Words of welcome
Ladies and gentlemen,
Thank you for your warm welcome and for inviting me to this forum. I am pleased to have the opportunity to share some thoughts with you today. As tax advisors, you work with tax revenue, a key component of public finances. In the spirit of Danish philosopher Søren Kierkegaard, who once wrote that he walked himself into his best thoughts, I would now like to walk you through the topic of public finances from my perspective as a central banker.
This tour will take in at least as many remarkable features as a stroll along the Lichtentaler Allee here in Baden-Baden, that composite artwork of trees, flowers and monuments. It will explore the interplay between fiscal and monetary policy in times of high inflation.
But my tour will also cast an eye on the state of public finances in Germany and the role of fiscal rules. These are of particular importance to central banks, both in Germany and, all the more so, in the euro area, where there are 20 governments with sovereignty over their fiscal policies, but a single monetary policy to safeguard stable prices. Fiscal rules are vital for sound public finances and for a stability-oriented euro area.