Johannes Müller, chief economist at Deutsche Asset & Wealth Management

Johannes Müller, chief economist at Deutsche Asset & Wealth Management: “Current account deficits are at the core of the crisis.”

As Germany reflects upon the 10th anniversary of its structural reforms known as Agenda 2010, the debate about how to best get out of the crisis is going strong in many European countries. Johannes Müller, chief economist at Deutsche Asset & Wealth Management, says that the primary goal should be to reduce current account deficits. “Current account imbalances are at the core of the crisis,” he says. Müller concedes, however, that many countries in Europe are making good progress in turning their economies around.

Imposing current account regulations won’t help

“Most notably Ireland, but also Spain or Portugal have undertaken important reforms to balance their current accounts,” Müller says. And while excessive current account surpluses are also inadvisable (“all you do is pile up green paper”), Müller is strictly against imposing current account regulations. Excessive surpluses will be a thing of the past once there are no more excessive deficit countries, he argues. What Müller is really worried about is central banks increasingly losing their independence. Multiple mandates, including not only price stability but also growth and employment, will lead to conflicts of interest, he believes. “In Europe, the jury is still out,” Müller says cautiously. But the signs are worrying.