Germany pressures the ECB: “Buy public debt is like a drug addiction”
- This is defined by the president of the Bundesbank, the German central bank, Jens Weidmann.
- He says that the massive purchase of debt by the ECB to nations with problems will end up affecting the taxpayers of the other countries.
- Weidmann also warns of an immediate risk of inflation in the euro zone.
- The words of the president of the Bundesbank have been subsequently endorsed by the German Chancellor, Angela Merkel.
The president of the Bundesbank , the German central bank, Jens Weidmann, has warned the European Central Bank (ECB) against the start of a new public debt purchase program and affirmed that this type of financing can “create addiction like a drug “.
“A policy of that type is for me close to state funding through the machine to print money, ” says Weidmann in statements published on Sunday the weekly Der Spiegel.
The rain of money from the central banks would only awaken existing ambitions. He adds that “in democracies, parliaments and not central banks must decide on such a broad pooling of risks “.
It also stresses that if the central banks of the euro area acquire public debt of certain countries “the titles will end up appearing in the balance of the euro system” and “in the end the taxpayers of the other countries will have to respond”.
After noting that this is not the way to solve the basic problems of the crisis, he comments that “the rain of money from the central banks would only awaken existing ambitions “.
“We should not underestimate the danger that funding through central banks can create addiction like a drug,” says Weidmann, who also sees the ECB’s independence threatened .
He adds that at second glance it is striking that the plans “lead to concerted actions by the state rescue funds and the central bank, in this way there is a link between fiscal and monetary policy” and therefore he wishes to avoid “politics monetary policy is subject to the domain of fiscal policy “.
In spite of everything, Weidmann considers that there is no immediate risk of inflation , although he warns that “if monetary policy is manipulated to become the political solution of the problems, its goal will end up being relegated increasingly to the background”.
The president of the Bundesbank is also opposed to the ECB being compromised “to guarantee at all costs the permanence of the member countries in the euro area.” Therefore, it considers that when deciding whether Greece should remain in the euro “the role of the monetary union should also play a role that does not suffer a greater loss of confidence and that the political and economic conditions of the aid programs maintain their credibility”.
As for the criticisms against his person for his critical stance, he says: “We, (the responsible ones) of the central banks, are currently acting in a borderline situation and therefore more and more basic questions arise, so we must be prepared to defend the positions that we maintain in the council also in a public way “.
Merkel supports her words
German Chancellor Angela Merkel has endorsed the warning made by the president of the Bundesbank. “I think it’s good that Weidmann constantly warns, I support Jens Weidmann and I think it’s good that he, as president of the German Bundesbank, has so much influence in the European Central Bank,” he told the ARD in an interview.
The chancellor also had words of support to the Greek Prime Minister, Antonis Samarás , who begged the German politicians not to issue too harsh statements against Greece so that the country can regain the confidence of the investors.
“I ask everyone to carefully measure their words, ” said Merkel, who believes that Europe is at a “decisive moment” since the beginning of the crisis three years ago.
Ultimately, Merkel considered that “there is no indication” that the International Monetary Fund (IMF) will abandon its role within the “troika” responsible for the rescue plan to Greece, as has been speculated lately.