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It appears that the 1992/3 crisis of the European Exchange Rate Mechanism was used by the Bundesbank to assert itself as the most powerful institution in Europe, already. In a recent diary of mine I quoted
this third-person account by the Bundesbank itself:
Crises in the ERM. In 1992, investors lose confidence in the stability of the pound sterling, in particular, and then, in 1993, in the French franc, resulting in speculative selling of the pound and franc; in 1992, the United Kingdom and Italy leave the ERM; in 1993, the fluctuations margins around the bilateral central rates are expanded sharply. The Bundesbank with its commitment to price stability had refused to lower interest rates massively. The partner countries are forcibly reminded of their responsibility for their currencies; the process of convergence needed for monetary union is strengthened.
I came across two interesting pieces. One by The Independent [UK]: The Sterling Crisis: The bank that likes to say realign: The Bundesbank (17 September 1992) and a cognitive-linguistic analysis of the press coverage: THE BUNDESBANK AND THE MAKING OF AN ECONOMIC PRESS STORY by a certain Michael White of Universidad Complutense de Madrid.
From The Independent:
The Bundesbank appears to have several reasons for its views on the EMS. Massive intervention on the foreign exchange markets to defend EMS currency parities threatens seriously to compromise German money supply growth targets, by increasing the quantity of marks circulating in the economy. At the same time, the Bundesbank also has to overcome the impression in Germany that it buckled to international pressure in cutting rates.

The Bundesbank also believes that until eventual monetary union in Europe, the EMS is a fixed, but adjustable, system. The Bundesbank case reflects its belief that it may be impossible for many EC countries to meet the convergence criteria of the Maastricht treaty, including a sharp reduction in budget deficits and national debt levels.


But underlying the Bundesbank's views is a deep- seated worry that its independence is under fire. When EMU first became a serious Community objective, Karl-Otto Pohl, Mr Schlesinger's predecessor, often warned of its high economic costs to the weaker countries. Bundesbank officials were concerned that their strict anti-inflation policies could be compromised by a European central bank sensitive to the less hawkish attitudes on inflation of some other European countries.

From Michael White:
One of the essential tenets of cognitive linguistics (which is the theoretic framework informing my analysis) is that thought is metaphoric and that consequently our conceptualisation makes natural and constant recourse to metonymy and metaphor in its processes.  Two immediate consequences immediately follow:  firstly, the fact that the use of metaphor and metonymy is to a very large degree highly conventional and secondly that it is so conventional as to go unnoticed in ordinary use or naturally occurring discourse ...


1) Bundesbank warns Bonn on federal debt (FT1:1-H)  -

very decidedly carries certain implications and not others.  In fact, it carries a wealth of these, for example:

  • the Bundesbank is in a position which commands a certain authority: it can warn.
  • if the Bundesbank warns, it probably has a stricter outlook on and a sharper awareness of the potential danger of the question at issue  than the recipient  of its warning.
  • Bonn has a certain degree of responsibility for the existence of federal debt.
  • Bonn is either unaware, or at least less aware than the Bundesbank of the potential danger of this debt.
  • there is a certain degree of independence between the two institutions.


  1. Many voices go into a Bundesbank utterance. (FT 11:3-H)[6]
  2. ... the Bank makes its views known to the outside world in a bewildering multiplicity of ways.  This is primarily because of its pluralistic way of making decisions. (FT11:3-L)
  3. When in recent weeks, a variety of Bundesbank's views ricochet onto the foreign exchange markets from several different angles, the Central bank can stand accused of inconsistency. (FT11:3).


Fourthly, my questioner at Debrecen, Torben Vestergaard, raised the issue as to the innocence or otherwise of the metaphors appearing in my analysis. If all discourse can carry and indeed conceal ideological positionings[14], metaphor, which typically highlights one/some aspects of phenomena and downplays or altogether hides others, could potentially provide a very powerful weapon for ideological manipulation. In light of metaphor's rootedness in conventional reasoning, this view has much to comment it: metaphor seems "naturally convincing" and is extremely difficult to argue against (see Lakoff 1992, Lakoff and Turner 1989). Thus, it is not surprising to find a proliferation of metaphor use in contexts where persuasion is at a premium - political partisan discourse, for instance or publicity (see Forceville 1995) In the array of metaphoric expressions presented in this article, there is little doubt, but there are cases where their force alone is particularly persuasive and it would be extremely difficult to counteract the message entailed. For instance, if the currency crisis is conceptualised as war and in that war the Bundesbank is held up to be orchestrating coups or practising plotting, sniping and sabotage, the position of the bank is certainly infinitely less defensible than it would be if it were referred to as being caught up in self-defence which would be considered highly legitimate. I have already mentioned that stereotype (which we have seen tapped for metaphorical purposes) is considered by Bell (1994:157) to be in itself a news value - that is, the closer a news item conforms to stereotype, the higher its chances are of getting into print. While stereotype is not to be written off completely as a valid component in argumentation (see Lee et al., 1995), nevertheless it should demand a critical perspective on the part of informed participants.[15] In short, then, with respect to this question as to the innocence or otherwise of metaphor, it would seem that the critical approach warranted by all discourse could be called upon to incorporate an extra effort in the presence of metaphor use.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Thu May 19th, 2011 at 08:58:35 AM EST
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