Monthly Report March 2020 Vol. 72 No 3 Deutsche Bundesbank Monthly Report March 2020 2 Deutsche Bundesbank Wilhelm-Epstein-Strasse 14 60431 Frankfurt am Main Germany Postfach 10 06 02 Publishing schedules for selected statistics can 60006 Frankfurt am Main be downloaded from our website. The statis- Germany tical data are also published on the website. Tel.: +49 (0)69 9566 3512 The Monthly Report is published by the Email: www.bundesbank.de/kontakt Deutsche Bundesbank, Frankfurt am Main, by virtue of Section 18 of the Bundesbank Act. It is Internet: www.bundesbank.de available to interested parties free of charge. Reproduction permitted only if source is stated. This is a translation of the original German language version, which is the sole authorita- ISSN 0418-8292 (print edition) tive text. ISSN 1862-1325 (online edition) The German original of this Monthly Report went to press at 11 a.m. on 20 March 2020. Deutsche Bundesbank Monthly Report March 2020 3 Contents Commentaries .......................................................................................................... 5 Economic conditions ........................................................................................................... 5 Public finances .................................................................................................................... 9 Securities markets ............................................................................................................... 12 Balance of payments ........................................................................................................... 13 German balance of payments in 2019 ............................................................ 17 German net exports from the perspective of the federal states ........................................... 19 What drives Germany’s TARGET balances? A BVAR analysis for distinguishing global and European causes ................................................................................................................ 30 Households’ digital purchases in the balance of payments .................... 41 New benchmark rates, new challenges: introducing the €STR in the euro area ....................................................................................................... 47 The Eurosystem’s money market statistical reporting as the basis for calculating the €STR . 54 €STR calculation method and procedure triggered in the event of temporarily insufficient data availability (contingency procedure) ........................................................................... 57 Looking back: the replacement of FIBOR by EONIA and EURIBOR when introducing the euro in 1999 ....................................................................................................................... 61 Upcoming discontinuation of LIBOR and role of RFRs ......................................................... 65 Deutsche Bundesbank Monthly Report March 2020 4 Statistical Section.................................................................................................... 1• Key economic data for the euro area .................................................................................. 5• Overall monetary survey in the euro area ............................................................................ 8• Consolidated financial statement of the Eurosystem ............................................................ 16• Banks .................................................................................................................................. 20• Minimum reserves ............................................................................................................... 42• Interest rates ....................................................................................................................... 43• Insurance corporations and pension funds .......................................................................... 48• Capital market .................................................................................................................... 50• Financial accounts ............................................................................................................... 54• Public finances in Germany ................................................................................................. 58• Economic conditions in Germany ........................................................................................ 66• External sector .................................................................................................................... 75• Overview of publications by the Deutsche Bundesbank .......................... 85• Abbreviations and symbols e Estimated p Provisional pe Partly estimated r Revised … Data available at a later date . Data unknown, not to be published or not meaningful 0 Less than 0.5 but more than nil – Nil Discrepancies in the totals are due to rounding. Deutsche Bundesbank Monthly Report March 2020 5 Commentaries Economic conditions suffering considerably under the effects of the pandemic. According to provisional Ifo survey Underlying trends results for March, economic sentiment in Ger- many has deteriorated dramatically. This was Emerging eco- Germany is facing unprecedented challenges mainly due to enterprises’ business expect- nomic upturn as a result of the rapid spread of the corona- ations, which saw an unprecedented fall. A brought to an abrupt halt by virus pandemic. It is the healthcare system that number of available indicators with a particu- consequences of coronavirus has the key part to play. The measures taken so larly short time lag, such as the strong decline pandemic far have the aim of containing the number of in restaurant reservations and lower passenger infections so as not to place too great a strain numbers at Frankfurt airport, also point in this on the healthcare system, but they will also direction. The consequences of the pandemic have massive implications for the economy. A are expected to have a massively detrimental slide into a marked recession is unavoidable. impact on economic output, at least in the first An economic recovery will set in only when the half of the year. Economic activity is likely to pandemic risk has been effectively brought decline considerably in many sectors, probably under control. Against this backdrop, economic resulting in a perceptible underutilisation of developments are characterised by unpreced- capacity in the economy as a whole. ented uncertainty. The year got off to quite a positive start, with the hitherto weak pace of The pandemic and the measures adopted to Pandemic industrial activity picking up at the beginning of contain it will hit the German economy through affects Germany economy 2020. Industrial output was up strongly and a variety of channels. First of all, direct eco- via multiple the orders situation showed a considerable im- nomic effects will become apparent in Ger- channels provement. According to the Ifo Institute, busi- many itself. In this respect, it is likely to be the ness expectations in manufacturing were point- more domestically oriented, consumer- related ing upwards well into February. Domestic eco- services sectors, which have thus far supported nomic activity, too, remained intact early in the economic activity, that will be most severely af- year. This was indicated by the perceptible rise fected. Hotels, restaurants and catering ser- in retail sales in January and by a strong upturn vices, the entertainment industry as well as in the construction sector, which was favoured trade fair operations and airlines are likely to by the mild weather. This overall picture sug- suffer very strongly from declining demand and gested that the two- speed growth in the Ger- precautionary closures. Besides this, other busi- man economy was gradually receding and that nesses, too, are being afflicted by potential its – previously weak – underlying trend was losses of work and sales due to protective and becoming stronger again. However, the pan- precautionary measures, such as the nation- demic has abruptly interrupted this develop- wide closures of schools and child day care ment. Amid all the uncertainty, its impact is centres. Added to this are external knock- on likely to be severe, at least for the coming effects which will chiefly hit export businesses months. The data for most economic indicators and thus industry. For example, demand for reflect the situation prior to the coronavirus German exports in countries worst hit by the outbreak. They were largely collected before pandemic is likely to fall considerably. Further- the worldwide escalation of the health risk, more, the cutback in production in countries and the authorities in the key trading partner that are particularly affected means that there countries, but also in Germany itself, took far- is the risk of supply shortages for key inputs. reaching countermeasures. Current surveys This might lead to production bottlenecks in suggest, however, that German firms are now Germany, too, even if there should be demand Deutsche Bundesbank Monthly Report March 2020 6 for the goods to be produced. All of the cited Economic conditions in Germany* obstacles can trigger negative confidence and second- round effects in Germany. These knock- on effects are nevertheless being countered to Seasonally adjusted a certain extent by Germany’s extensive social Orders received (volume); 2015 = 100 security system, the accommodative