Germany profits from providing credit to Athens

Sir, Germany has not “thrown money into a bottomless pit”, as Wolfgang Schäuble, German finance minister, claims (“Merkel and Hollande to grapple with Greece”, August 20). Germany has not given any present to Greece; instead, it has provided credit of ¤15.2bn and has contributed just guarantees. None of it is lost. Above all, it is the European Central Bank itself and hence Germany in particular that decide whether or not to let Greece become insolvent. This is why the risk is nil. Mr Schäuble would do well to remember the tradition of central banks to create money, for example. As long as new money is given against performance as it is for real investments, no inflation need be feared – especially not in a recession.

Until now, Germany has only gained: by the end of 2011 it had received ¤380m in interest payments on its credit to Greece. It has also benefited from increasing its exports due to the fall in value of the euro during the crisis; the German Macroeconomic Policy Institute (IMK) estimates the worth of this extra advantage at about ¤50bn.

Finally, Germany saves a lot of money on its own interest rate payments. With its image as a safe harbour it can issue bonds against zero or even negative interest rates. According to the German Institute for the World Economy (IfW), these savings have already reached ¤68bn. Thus it is not Germany paying for Greece. It is Greece that benefits Germany.

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Suleika Reiners, Policy Officer for Future Finance, World Future Council, Hamburg, Germany