Germany Warns Against Expecting Too Much From ECB
German Finance Minister Wolfgang Schaeuble warned Monday against expecting too much from the European Central Bank at its meeting this week, as markets hope for a raft of new anti-crisis measures.
"We must be very careful not to nurture too many false expectations," Schaeuble told Deutschlandfunk public radio in an interview.
The German government believes that "monetary policy must not be used to finance government debt" and any such moves in this direction "must be nipped firmly in the bud," he said.
Nevertheless, Berlin is convinced that the ECB will make no decisions that are in contradiction to its mandate, Schaeuble insisted.
Expectations are indeed running high for the ECB governing council's regular monthly policy meeting on Thursday, with markets looking to the bank to come to the Eurozone’s rescue yet again in the seemingly never-ending debt crisis.
At last month's meeting, Draghi said the central bank "may" resume bond purchases, albeit under strict conditions that are still in the process of being worked out.
But German central bank chief and ECB governing council member Jens Weidmann is firmly opposed to such a program.
Weidmann argues the bond purchases, which have worked in the past at bringing down the borrowing costs of crisis-hit countries, are tantamount to monetary financing, where the central bank prints money to pay off a country's debt. And that is expressly forbidden under the ECB's statutes.
He also fears the measures will fuel inflation, ease the pressure on over-spending governments to get their finances in order and erode the independence of the ECB.
In an interview with the regional daily Rheinische Post, Economy Minister Philipp Roesler also said buying up countries' debt was "no solution in the long term because it brings with it inflationary risks.
"ECB president Mario Draghi has himself said that only structural reforms in every country can safeguard the stability and competitiveness of our currency," Roesler said.
Source: Agence France Presse
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