Wednesday afternoon, 15:29, Hachenburg: it is bitterly cold, the Westerwald is covered in a thick coating of snow. Students at the Bundesbank’s University of Applied Sciences would normally be discussing their plans to travel home on Friday – or whether they would rather stay in the Westerwald due to the winter weather. But what is normal during the coronavirus pandemic?

And so 40 students from all around Germany are sitting at their computers on this particular day – be it in Lörrach, on the island of Fehmarn, or near Magdeburg. They are taking part in a virtual lecture on macroeconomics held by Professor Lilli Zimmermann in English. Studying from home on a permanent basis – you can sense some variety is needed.

“We help each other wherever we can”

This afternoon, the President of the Bundesbank himself, Jens Weidmann, will be providing a much needed breath of fresh air. He is scheduled to join the virtual event, which he does at 15.31. “I was having a few technical problems at first – I’ve had to join using the iPad now,” he immediately apologises for his minimal delay. Without further ado, Mr Weidmann asks how the Hachenburg students are doing. “How is online learning going? Have you already formed virtual learning groups?” he asks. Paul Weitzer chips in from Lörrach to say that he has in fact managed to meet up with his fellow students once in Hachenburg. Student Stephane Ewig, from near Rostock, thinks that sharing the experience of studying from home has brought the year group even closer together: “We help each other wherever we can”.

Mr Weidmann then asks whether the students who started in autumn 2020 already feel like they are part of the Bundesbank. Professor Lilli Zimmermann points out that this feeling mainly develops during the practical modules. Student Meike Hannig from Fehmarn says that it’s a shame that the next practical module starting in April will take place online for many students.

Online lectures more tiring than lectures on-site

Weidmann asks how the students structure their day at home. “I found it difficult at the start; I felt drained after long online lectures,” Meike Hannig admits. “Now I plan to get some fresh air every day – and I make sure I do.” “I see we use the same tricks,” the President replies. He reveals that he personally finds a day filled with video conferences more exhausting than having face-to-face meetings in the office. “If I get a moment, I go out with my dog and – if no one disturbs me – I make some phone calls while I walk.”

“The most difficult crisis in the post-war period”

Of course, the students also want to know what their President makes of the current economic situation. Florian Otto, from near Magdeburg, asks the President how the large debts racked up during the coronavirus pandemic could be reduced and how risky the Eurosystem’s asset purchases are in this context. The Bundesbank President points out that the euro area is in a special situation: “We have a single monetary policy, but separate fiscal policies”. Protective mechanisms, such as the European fiscal rules, are in place to counter the resulting incentives to take on more debt, he clarifies. “Sound fiscal policy is a prerequisite for a monetary policy geared toward price stability,” he stresses, noting that it is therefore important that government assistance measures are temporary. But Mr Weidmann also underlines how unique the coronavirus crisis is and how it is placing special demands on fiscal policy. “It is probably the most difficult crisis we have faced in the post-war period”.

Central banks’ frame of reference should remain constant

“Expansionary monetary policy is important in this situation, but the emergency monetary policy measures must not persist indefinitely,” Mr Weidmann tells the students. He explains that monetary policymakers have to ensure that their asset purchases do not undermine the disciplining effect of capital markets on public finances. Mr Weidmann is concerned that central banks’ fundamental frame of reference could shift. “First there was the financial and sovereign debt crisis, now the pandemic. There is a risk that a return to normality will become an increasingly distant prospect.”

Sascha Glittenberg asks what lessons the Bundesbank should learn from the pandemic for its future working environment: “What will change permanently after the coronavirus pandemic?” Mr Weidmann points out that the pandemic is not over yet, but that he already sees a clear trend: “The balance between working in the office and working from home will certainly shift. We have learned recently that many things can be done just as well from home. But physical meetings and business trips will still be necessary, and the longer the pandemic lasts, the more we will realise how much we miss informal and personal contacts.” According to Mr Weidmann, the coronavirus crisis has boosted the process of digitalisation at the Bundesbank, from paperless offices to virtual meetings.
It is 16:19, just over a quarter of an hour later than scheduled, when the President bids a virtual farewell, but not without first dropping a hint: “I look forward to returning to Hachenburg in person next time”. But the students agree that even this “virtual” change from studying at home has been a very welcome one, and the response is positive across the board.