Profiteering: Crisis Has Saved Germany 40 Billion Euros

German Finance Minister Wolfgang Schäuble has every reason to smile. Zoom
DPA

German Finance Minister Wolfgang Schäuble has every reason to smile.

Germany has profited from the euro crisis to the tune of 41 billion euros in reduced interest payments. Strong demand for its debt has cut yields and made it cheaper for Germany to borrow. Meanwhile, the crisis has only cost Germany a mere 599 million euros thus far.

Germany is profiting from the debt crisis by saving billions of euros in interest on its government debt, which has enjoyed a steep drop in yields due to strong demand from investors seeking a safe haven.

According to figures made available by the Finance Ministry, Germany will save a total of €40.9 billion ($55 billion) in interest payments in the years 2010 to 2014. The number results from the difference between actual and budgeted interest payments.

The information was released in response to a parliamentary inquiry from Social Democrat lawmaker Joachim Poss.

On average, the interest rate on all new federal government bond issues fell by almost a full percentage point in the 2010 to 2014 period. Financial investors regard Germany as a particularly safe creditor because of its solid state finances.

The interest rate savings combined with unexpectedly high tax revenues generated by the strong economy have also led to a decline in new borrowing. Between 2010 and 2012, the German government issued €73 billion less in new debt than planned.

The Finance Ministry is trying to maximize the benefits of the low interest rates by placing more longer-term bonds at favorable rates. Between 2009 and 2012, the proportion of short-term debt issues with maturities of less than three years fell to 51 percent from 71 percent.

According to the Finance Ministry, the costs of the euro crisis for Germany have so far added up to €599 million.

SPIEGEL/cro

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1. Encouraging the Eurozone crisis
pmoseley 08/19/2013
If Germany is profiting so much from the Eurozone crisis then it is within it's own interest to keep that crisis going. Indeed, if German leaders fail to do that then they will be reneging on their duty to their electorate which is to safeguard the interests of Germany. So I ask, how is Germany intentionally prolonging the crisis and if not, then why are German leaders betraying the trust that German voters have placed on them?
2. optional
peskyvera 08/19/2013
'Cheaper for Germany to borrow'...but the average-sized business has a hard time obtaining a loan because the banks are refusing to lend. Make sense?
3. Good for Germany
danm 08/19/2013
I would like to correct the author. Germany is profiting from a series of good decisions regarding policy over the past several decades that have made the German economy more robust and secure than other countries. The market is rewarding Germany for doing the right thing. Do not be ashamed. Do not turn this into a reason to blame the German people.
4. Germany's Invisible Debt Mountain
Gerard Mallory 08/19/2013
It is just hilarious to read Wolfgang Schäuble's claims that 1) The Euro Crisis has 'saved Germany' 40 billion Euros' and 2) that the Crisis has only cost Germany 600 million euros to date! How Angela Merkel has managed to hide the real truth for so long from the German people baffles me. The total amount of loans advanced by the ECB to the weaker southern half of the Euro Zone is now approaching 1 trillion (one thousand Billion!). Most of this is unlikely ever to be repaid. So who is left to take on the obligation of repaying most of this debt when it becomes due? Not France (the second biggest economy in Europe) as it now fast approaching becoming an economic basket case. So my real question is this - how can one of the most intelligent, successful peoples in the world not be aware that Germany is fast approaching the status of becoming an economic 'paper tiger'?
5. Why could Eurozone collapse?
Theofanis Giotis 08/19/2013
Suppose that on the same street we have two retail stores (A and B) of the same size, some turnover and same number of employees. Store A can borrow money very difficulty with an interest of 4% to 6% and always with collateral only. Store B can borrow money with no collateral and an interest rate of about 0% to 1%. After some time, which of the two stores with go bankrupt?
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Graphic: German profits from the euro crisis. Zoom
DER SPIEGEL

Graphic: German profits from the euro crisis.

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