Bogenberg Declaration of the Friends of the Ifo Institute and the Ifo Executive Board
A joint declaration of the trustees of the Friends of Ifo and the Ifo Executive Board calls for a fundamental revision of the distribution of voting rights and of the decision mechanisms of the European Central Bank (ECB) Council as part of the renegotiations of the EU treaties. It is not acceptable that a decision-making body in which the voting rights are wholly detached from liability should, by virtue of a simple majority, adopt measures that impose hundreds of billions in liability for Germany, according to the signatories. The Declaration’s signatories include Roland Berger, Eckhard Cordes, Dirk Ippen, Klaus Mangold, Georg Milbradt, Dirk Rossmann, Hans-Werner Sinn, Heinz Hermann Thiele, Peter-Alexander Wacker and Otto Wiesheu. The Bogensberg Declaration is the result of a strategy meeting of the Society of Friends of the Ifo Institute and the Ifo Executive Board held at Bogenberg, Bavaria.
The ECB, according to the declaration, should limit itself in future to purely monetary policy and halt the controversial purchases of government bonds issued by member countries. The Target balances, which in the case of the Bundesbank amount to almost 500 billion euros in claims on the ECB, should in future be settled once a year, as in the United States, with interest-bearing marketable securities. Here lies the “Achilles heel of the Eurosystem” that puts those responsible for saving the Eurosystem under pressure, the Bogenberg Declaration asserts. The rescue package needs a clear crisis mechanism and insolvency rules that define and limit the assistance of the international community to a specified timeline. The EU should focus on improving governance and competitiveness in the crisis-hit countries instead of making funding available that prevents the necessary adjustments from being undertaken. Providing money alone only maintains the excessively high prices of goods and assets that arose during the bubble and prevent investment capital from returning and current account deficits from disappearing. The banks must be mandated to back up government bonds with capital reserves, and if necessary to accept the state as co-owners if they are unable to recapitalise on their own.
The complete text of the declaration can be found here (PDF). It also appeared in full on the editorial pages of the Frankfurter Allgemeine Zeitung on 7 December 2011.