Federal Reserve Chairman Jens Weidmann warned in debt dispute with Greece against the misuse of the European Central Bank. “The decision on the future of Greece in the currency union is clearly in the policy,” Weidmann said in an interview the newspaper “Handelsblatt”.
The increasing politicization of Central banks prepare him just as worried as the ever-increasing expectations that are addressed to the central banks. Thus threatening a dangerous overload. “We are not all-powerful.”
Weidmann criticized the emergency aid for the Greek banks. “The fact that banks without market access loans be granted to fund bonds of their own state, which is even without access to the market, I think, overlooking the prohibition on monetary state financing is not in order.”
Political pressure on banks increases
Also, the bond purchase program of the ECB sees Weidmann more critical. This would, the central banks of the Eurosystem as the largest creditor countries. The amalgamation of monetary and fiscal policy to take on. This could the political pressure on the central banks to rise in future monetary policy decisions.
In addition, Weidmann expects a rise in prices in the euro area. He assumes that the economy is recovering and in the process also climb the inflation, he said. “Deflationary threats that were until a few weeks still eagerly discussed, I see in any case less than ever.” Finally, the prices were no longer like in the euro zone, the inflation rate was 0.0 percent in April. See stable prices, the monetary authorities, however, only with values of just under two percent guaranteed.
critique of monetary easing
Therefore, the ECB has launched a multi-billion dollar program to buy government bonds and other securities in March, technically called quantative easing (QE). This is to to September 2016 pumped over a trillion euros into the banking system to stimulate the economy and fueling inflation.
Weidmann this looks critical. It raises the question whether the QE program was imperative and had as assess the risks. The central banks of the Eurosystem would be the largest creditor of the States. “The amalgamation of monetary and fiscal policy continues to grow.”
ECB chief Mario Draghi sees no reason for a premature end to the induced by the central bank large flood of money. “We will implement our acquisition program fully, as previously announced,” Draghi said, according to the transcript on Thursday at the headquarters of the International Monetary Fund (IMF) in Washington.
In any case, it will run until the rate of inflation sustainable move in the direction desired by the ECB. Last prices stagnated in the euro zone after they had previously fallen. This caused much concern to the European Central Bank (ECB) of deflation – a damaging economic decline in prices across the board. The ECB aims to inflation of just under two percent.
Draghi said in Washington, companies and consumers are still hesitant after nearly seven years of crisis. Therefore, it could still take some time before the ECB could exclaim with their actions victory.
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