Euro Crisis

Bundesbank Chief Says ECB Has No Answers to Euro Crisis

Governments have to get their policies under control

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The European Central Bank cannot solve the euro zone crisis, Bundesbank chief Jens Weidmann told economists on Sunday, pressing the bloc's governments to get their economies in shape and tighten their fiscal rules.

Weidmann addressed an economists' conference in Aix-en-Provence, southern France, only three days after the ECB broke with precedent by declaring that it intended to keep interest rates at record lows for an extended period and may yet cut further.

"Monetary policy has already done a lot to absorb the economic consequences of the crisis, but it cannot solve the crisis," Weidmann said in his speech.

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  1. “In addition to stronger rules, we need to make sure that in a system of national control and national responsibility, sovereign default is possible without bringing down the financial system. Only then will we really do away with the implicit guarantee for sovereigns.”

    Shades of Ludwig Erhard!
    Read that carefully; it contains a message that is anathema to statists everywhere.
    What is says is that states are subject to market forces, NOT the other way around. States are not allowed to print their way out of default.
    Refreshing, but I wonder how that will sit with, oh, Hollende for one.

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