Möglichkeiten zur Förderung des deutschen Geldmarktes im internationalen Wettbewerb

Abstract

This contribution discusses, especially on the supply side, the reasons why the German money market is fairly underdeveloped compared with foreign money markets, insofar as the instruments employed are concerned. The market for instruments such as Certificates of Deposits (CDs), Commercial Papers (CPs), Repurchase Agreements, money market instruments of the Federal Government and Deutsche Bundesbank is rather small in volume or even non-existent by comparion. A wider range of short-term financing instruments and a greater market depth for trading and disposition would lead to an improved allocation of scarce financial resources on the money market. However, the minimum-reserve provisions, the socalled anchoring principle governing the market for DM-denominated issues, and the provisions of the Act on institutional investors (KAAG) represent impediments on the German money market. The minimum-reserve provisions in the present version prevent an increase in variety of money market instruments. Abolishing the minimum-reserve requirements or reducing them to zero would leave enough scope to the Bundesbank for managing money supply; this is all the more so because it has largely renounced variationsin the minimum-reserve requirement for time deposits anyhow and because the minimumreserve rate has been down to a mere 2% since 1 March 1993. The anchoring principle whereby DM-denominated security issues by foreign investors are only permitted where the lead management of the issue is in the hands ofa German credit institution or a foreign credit institution operating a branch office in the Federal Republic of Germany with a full-fledged loan management unit restricts the issuing freedom on the German money market. Reguiring a two-year lifetime as a minimum reduces foreign issuers’scope for participating in the German money market. Moreover, Deutsche Bundesbank has banned the sale of DM-denominated shares of money market funds through its “declaration on DM-denominated foreign issues”. The anchoring principle violates the 1988 EC Directive on the liberalization of capital movements. Abolishing the anchoring principle would not impair Deutsche Bundesbank’s scope for stability policy, because the money supply management would not be affected by such a move. The Act on institutional investors in its present version obstructs genuine money market funds as well. The fact that the single European market for financial services is short of completion suggests that money market funds be admitted. Disadvantages of German institutional investors against competitors from EC Member States ought to be avoided. Non-admission of money market funds represents a restriction of market access for German and for foreign institutional investors which is opposed to Germany’s traditional openness of markets.