The head of Germany’s central bank has said that quantitative easing will not solve the economic problems of the Eurozone.
MOSCOW, January 25 (Sputnik) – The president of the German central bank, Jens Weidmann, has expressed his disagreement with the ECB’s decision to implement quantitative easing in an interview with German newspaper Welt am Sonntag.
“Bond-buying by the government is not a normal instrument of monetary policy,” Weidmann told the paper on Sunday. Such a policy, when carried out in a monetary union like the Eurozone, “is connected with particular drawbacks and risks,” Weidmann continued, adding that “there should be a high threshold for their use.”
When asked if the ECB’s decision to go against the wishes of financial authorities in Germany, who had repeatedly expressed their misgivings over such a move, represented a watershed in relations between the ECB and its strongest national economy, the Bundesbank president replied, “I would not hype this as a turning point, but for me it is nevertheless a grave decision.”
This is not the first time Weidmann, who sits on the ECB’s Governing Council and voted against the QE decision, has voiced his opposition to the policy. The Guardian reports that at a conference which was held in December in Frankfurt, he said, “you cannot simply apply the same formula in Europe that has enjoyed success in the US or in Japan…In the USA, there is a central state that issues bonds that are very safe and secure. We don’t have that central state here.”
Full article: Bundesbank President Says ECB Monetary Policy ‘Grave Decision’ (Sputnik News)