No cheers for the Bundesbank: German policies are hurting ... Germans.

• Author: Krauss, Melvyn

One reason the Bundesbank is popular with ordinary Germans is that it is seen to pursue a more national than European agenda.

But the German central bank on occasion can shoot itself in the foot. Policies intended to promote strictly German interests wind up damaging them.

The Bundesbank's successful campaign of until recently stalling ECB quantitative easing is a case in point. Instead of pressuring structural and fiscal reforms in eurozone reform laggards such as Italy and France--something the German public clearly approves of--the quantitative easing stalling strategy has damaged some of Germany's finest export companies and financial firms.

Export companies have been hurt because the Bundesbank only belatedly anticipated that while the ECB sat on its hands, the Bank of Japan would adopt an aggressive quantitative easing program of its own, aimed at lowering the yen in world currency markets.

The disparity between Japan and Europe on quantitative easing has led to a sharp appreciation of the euro relative to the yen--putting German jobs and profits at risk, especially in export industries that directly compete with Japanese firms in world markets such as automobiles, heavy capital equipment, high-tech goods, chemicals, and so on.

German export firms such as Siemens, Bosch, Villeroy and Boch--and even the less price-sensitive luxury car makers such as Mercedes Benz and BMW--were caught in the crossfire between Japanese monetary aggression on the one hand and the Bundesbank's quantitative easing intransigence on the other.

Another German industry hard hit by Bundesbank stalling on quantitative easing was German insurance companies and pension funds.

The central bank's effective stalling allowed the eurozone's disinflationary process to proceed to the point where yields on German bunds have reached record lows.

This strangled the insurance companies, which have fixed rate legal obligations to savers they must respect, and pension funds, which have fixed obligations to pensioners.

Things reached the point where only a major operation--which has to include ECB purchase of sovereign bonds to be effective at this late date--was capable of doing the job.

To some extent, German financial firms got what they deserve. They...