The President of the Deutsche Bundesbank, Jens Weidmann, visited the Czech National Bank yesterday. The main topics of his informal meeting with CNB Governor Jiří Rusnok and other members of the Board were the view of the Czech economy from outside and the situation of the German economy. The future of the euro area and the banking union were also discussed.

"We found common ground with President Weidmann in many areas. We agreed, among other things, that the current period of economic growth is the perfect time to implement necessary reforms not only in our two economies, but also in the euro area, whose long-term prosperity is crucial to both Germany and the Czech Republic," said Governor Jiří Rusnok after the meeting, adding: "We both regard the rise in protectionist measures in trade relations between the world’s major economic centres as the main global risk. This trend is worrying because, among other reasons, it is occurring at a time when some economies still have not fully shed the burdensome legacy of the financial crisis."

The meeting also revealed that both sides consider high levels of government debt to be a constraint on fiscal room for manoeuvre. "Large stocks of public debt make it difficult to channel government spending into investment, they weaken resilience and thereby raise uncertainty, which is very likely to dampen economic growth in the long term," highlighted President Weidmann. "While we strongly supported the strengthening of monetary union through further institutional reforms, we also confirmed today that any viable reform should be geared towards a balance of actions and liability."

The meeting of representatives of the two central banks was followed by a tour of Prague’s historical centre. In the evening, Mr Weidmann attended a dinner with representatives of German companies in the Czech Republic organised by the Czech-German Chamber of Industry and Commerce.

Mr Weidmann was visiting the CNB for the first time during his term of office and is the fifth Bundesbank President to have done so.