Forming a Coalition in Germany Far From Straight Forward

It would be unwise to take popular talkfests and loud one-liners for negotiations to promptly form Germany’s new government. Europe’s largest economy is now at the beginning of one of the most difficult political processes in its post-war history.Fortunately, barring more dramatic complications, the short-term impact of this Italian-looking imbroglio won’t matter much for euro-denominated asset values. The currency is firmly in the hands of the European Central Bank, a supranational institution that is, by design, the only truly and totally independent central bank in the world.Longer-term implications of German political instability for Europe and the monetary union are a different story. As things now stand, institutional reforms to create a euro area fiscal union, and to strengthen the coordination of structural policies, are effectively postponed sine die — a Latin phrase to say a back, very back, burner that may never light up.That, too, doesn’t matter. The EU and the euro area can function with the current degree of integration, overseen and arguably mismanaged by a sprawling European administrative infrastructure. They should probably copy the Trump administration’s appointees in charge of rolling back excessive bureaucracy and throwing away their thick regulatory rule books.

Source: Germany political crisis is an economic sideshow – commentary – CNBC

Busy US Data Weeks Kicks Off With PMIs

EUR/USD – Euro Starts Week Lower After Catalonian Chaos

Euro’s Catalan Woes

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.