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What is the Bundesbank?

2016-11-18T10:55:30+00:00

The term 'Bundesbank' is included in the Banking edition of the Financial Dictionary. Get yours now on amazon in ebook or paperback format. Read more here...

The central bank of Germany is the Deutsche Bundesbank. The Federal Republic of Germany established it as the German central bank in 1957. The bank headquarters reside in Frankfurt in the state of Main. The bank maintains regional offices throughout nine cities in the country. These regional offices have a total of 35 different branches.

This bank is different from many central banks in its many locations and interactions with the public. The Bundesbank has a presence in every major region of Germany. Every regional office has responsibility for either one federal state or sometimes several of them.

The Bundesbank Executive Board makes the decisions for the central bank. The President of the bank, Vice President, and other members comprise this critical body.

The Bundesbank carries out a number or roles. It provides the German economy with bank notes. The bank is also the regulator for supervising the German banks. Besides traditional central banking roles like these, it also provides information to the public in the form of economic education through its around 40 locations in the country. About 2,600 staff work in the regional offices. Another approximately 2,600 employees serve in the branches of the bank.

Bundesbank branches and regional locations have different roles. The regional offices prove to be the on-site financial institution supervisors. Each of the regional offices is responsible to oversee the financial services and banks that operate in their one or more regions. These supervisors have to consider and evaluate reports and notifications that the banks must submit in turn routinely. Among these is their statement of annual accounts.

The supervisors from the regional offices of the central bank also have regular meetings with these financial institutions’ senior management teams. Inspectors from the regional office determine if the liquidity and capital on hand are sufficient according to the laws. They also decide if the banks are meeting the minimum risk handling requirements.

Assessing credit is another critical role that the regional office staff carry out with the individual banks. They provide the banks with money in exchange for collateral the central bank accepts as eligible. Regional offices make sure that the balance sheets are healthy.

Economic education comes from the regional offices as well. Experts from the central bank give updates in plain language on important issues like monetary policy, cash, and financial markets. They do this at events held in each region, like the “Bundesbank Forum.” Any member of the public is allowed to attend. Regional offices also provide seminars to students and teacher on developments in monetary policy.

Branches of the central bank are where matters related to cash are handled in the country. These branches issue the new banknotes and coins into circulation by delivering them to the major customers such as grocery stores and financial institutions. The branches are responsible for checking deposited coins and banknotes to make sure they are authentic and of high quality. They replace damaged ones for any customer who brings them to the branch.

In order for a customer to exchange a bank note, he or she must have minimally 50% of the note in hand. If they do not, customers must offer conclusive proof that the missing part of the note was destroyed.

Germany’s central bank does not set interest rates or conduct monetary policy on its own. As a member of the euro zone, the country has ceded control of this important function to the European Central Bank. The German central bank is an important member of the ECB and plays a major role in influencing the overall policy of the euro zone wide central bank.

The term 'Bundesbank' is included in the Banking edition of the Financial Dictionary. You can get your copy on amazon in Kindle or Paperback version. See more details here.