In an interview posted on Friday, ECB policymaker Joachim Nagel cautioned against a hasty reduction in interest rates due to ongoing high inflation and significant uncertainty. Nagel, the President of the Bundesbank, also expressed confidence in the forthcoming adoption of Basel III banking regulations in the United States and Europe. Furthermore, he rejected a suggestion by a German official to include bitcoin in official reserves, emphasizing that bitcoin lacks the necessary safety and transparency required for currency reserves.
Although the ECB has decreased interest rates four times since June and anticipates further cuts in the next six months to address lowered inflation, Nagel advised a prudent stance, highlighting persistent high services inflation and the prevailing uncertain global trade environment. Referring to the discussions within the ECB, Nagel noted, "That's part of it."
Dismissing a proposal by Christian Lindner to integrate bitcoin into the Bundesbank and ECB reserves, Nagel underscored the importance of maintaining safety, liquidity, and transparency in currency reserves, qualities he believes bitcoin does not possess.
Regarding global banking regulations, Nagel reaffirmed his belief that Basel III would be finalized on both sides of the Atlantic, emphasizing the necessity for unified European dialogue. While acknowledging the delayed implementation of the rules by the Bank of England until January 2027, Nagel expressed confidence in a consistent approach to regulations to enhance banking safety, even amid potential changes in the U.S. administration.