In an interview with Wirtschaftswoche, Federal Finance Minister Wolfgang Schäuble talked about ECB monetary policy, financial assistance for Cyprus, and the German government's fight against tax evasion.
Schäuble said: "Pumping money into the economy without the necessary reforms won’t create sustainable growth. People overlook the fact that the risk of creating a bubble outweighs the temporary economic effect.“
He continued: "The stability of the euro since its inception, as the ECB is well aware, proves that it has been very successful in fulfilling one of its core tasks. If the ECB uses the leeway to reduce liquidity slightly, then that is something I welcome. But we here in Germany shouldn’t forget that growth in many European countries is still precarious.“
"We’re not defending the euro out of largesse or because we’ve got so much money lying around, but because the common currency is of greatest benefit to us Germans.“
On bailing-in Schäuble explained: "Participation on the part of owners, subordinate bondholders and unsecured investors has to be the norm when a financial institution gets into distress. That’s nothing new, and has been the G20’s declared policy since 2008. Otherwise, we won’t get the moral hazard issue under control where banks make huge profits with high-risk transactions, and losses are then dumped on society if they fail. That is unacceptable.“
On taxation he added: "A uniform, global tax system is an illusion. But minimum taxation would be desirable. In Germany we have introduced a minimum threshold for trade tax to put an end to unfair tax competition among the municipalities.“
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