Bundesbank/Weidmann: The macroeconomic importance of capital markets

22 May 2014

Jens Weidmann, President of the Deutsche Bundesbank, argued that balanced rules to protect investors and measures to secure financial stability are necessary and in the interests of all capital market participants.

Core hypotheses regarding the role of capital markets:

Any attempt to assess the macroeconomic importance of capital markets solely on the basis of empirical studies of their growth-promoting impact would surely overstate the meaningfulness of such studies. Instead, a more comprehensive approach is necessary to address this issue. But first, let me present four core hypotheses regarding the importance of the capital market from a central bank's perspective:

There is no doubt that capital markets perform important macroeconomic functions. The increasingly important role of the capital markets as a source of corporate financing is a positive development, particularly as they diversify firms' funding structure and make them less vulnerable to crises.

By not participating in the capital market, retail investors are missing opportunities to share in business success. Where this is due to a lack of knowledge and understanding, financial education as provided by organisations such as Deutsches Aktieninstitut can help to gradually increase the participation rate.

Balanced rules to protect investors and measures to secure financial stability are necessary and in the interests of all capital market participants.

Full speech


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