FRANKFURT (Reuters) - A return to the D-Mark would throw Germany’s economy into a deep structural crisis, the chief executive of Europe’s biggest insurer was quoted saying, adding such a move would be “irresponsible”.
“In this scenario, Germany would slide into a deep depression with GDP dropping by double digits for a while, ultimately losing 25 percent ... within four to five years,” Allianz (ALVG.DE) CEO Michael Diekmann was quoted saying in German weekly Welt am Sonntag in an interview.
“Our calculation shows returning to the deutschmark would be irresponsible. So this kind of speculation won’t get us anywhere,” he said.
A majority of Germans expect the euro crisis to worsen but will have little impact on their personal wealth, and believe the common currency will survive, according to a survey published in June.
Nearly 80 percent of those surveyed expect the debt crisis to deteriorate, but 70 percent believe the euro will endure, the poll showed, even though more than half also said they wished Germany had retained the Deutschmark.
Asked whether Allianz could guarantee customers the safety of their life insurance, Diekmann said: “Absolutely, our German life insurance is safe”. He said, however, that low interest rates were a challenge for insurers.
On Thursday, the European Central Bank cut interest rates to a record low in an effort to breathe life into the deteriorating euro-zone economy.
In addition to cutting the main refinancing rate, the ECB also reduced its deposit rate, which acts as a floor for the money market, to zero from 0.25 percent.
“But we have calculated this out as well: even in the very unlikely case that interest rates remain this low for the next 20 to 30 years, Allianz would be able to fulfill all of its guarantees,” Diekmann said.
Reporting by Christoph Steitz; Editing by David Holmes