Germany's top central banker warned that Europe's debt crisis will take as much as a decade to overcome, dismissing the view expressed by some political leaders that the worst of the crisis is over.
Bundesbank President Jens Weidmann signalled that the European Central Bank could reduce interest rates if incoming economic and inflation data suggest it is warranted. But he warned that such a move wouldn't turn around the euro bloc's economic fortunes, instead pinning responsibility on elected leaders to find ways to kick-start growth and channel money to small businesses.
"Everyone is asking what more can the central bank do instead of asking what other policy-makers can contribute", said Mr Weidmann. On the issue of helping small businesses in southern Europe gain cheaper access to credit, which many economists see as critical to hopes for a recovery later this year, Mr Weidmann said institutions such as the European Investment Bank have better tools to address the problem.
He endorsed the recent agreement between Cyprus and its international creditors to impose steep losses on large depositors at its biggest banks. "The Cypriot case shows that it's possible to wind down banks. This is in principle a good thing, because it means that taxpayers don't always have to step in to bail out banks", he said.
The German banker has for months fretted that central banks are under too much pressure from politicians to spur growth in their economies through ultralow interest rates and other stimulus, citing Japan and Hungary, a message he plans to carry to Washington.
Full article
© Wall Street Journal
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article