Bond purchases by the ECB. Bundesbank chief warns of billion-risks.
Bond purchases by the ECB
Bundesbank chief warns of billion-risks
Federal Reserve Chairman Weidmann: "Risks must be redistributed"
Jens Weidmann attacked his colleagues at the European Central Bank: Due to the repurchase of government bonds ailing countries indicates the Bundesbank President, in a SPIEGEL interview on huge risks for the German tax payer.
Bundesbank President Jens Weidmann dissociates from the reform policy of the European Central Bank (ECB). With its monetary policy measures to calm the markets it had "considerable risks" taken in its balance sheet. That would mean "of course at the same time that risks between individual countries will be redistributed to the taxpayers," he said in an interview with SPIEGEL. "We need to reduce these risks again because of the risks associated with 27 percent of the German tax payer right now."
The European Central Bank buys bonds since May 2010 € heavily indebted countries in order to lower market interest rates for these securities artificially. It was initially only to Greek, Portuguese and Irish bonds, widened the ECB, the program recently made in Italian and Spanish bonds. Overall, the Fed has been government bonds with a volume of more than 140 billion € in their Geschäftstbüchern.
If a state does not repay his debts, this would be huge holes in the balance sheet of the ECB tear. In the worst-case scenario, the 17 euro countries, which carry the bank, put up more new money. Germany would be involved in this case according to its share of the central bank with 27 percent of the total.
Weidmann wants to preserve "stability-political principles"
In order to avoid further risks, Weidmann had voted in the Council of the Federal Reserve, along with ECB chief economist Juergen Stark against the purchase of government bonds. The Germans, however, were largely isolated, Stark explained why on 9 September resign. For him, the former State Secretary, Federal Ministry of Finance, Jörg Asmussen, move up in the Governing Council. Experts doubt that he will speak out strongly against the similar bond purchases as Weidmann and Stark.
Weidmann will at least remain steadfast. He sees himself "in the tradition of political stability principles of the Bundesbank, which is also supported by the German public." He would bring this position further in the Governing Council. The Federal Bank chief considers it wrong, "referring to a general state of emergency all the proven principles to throw the monetary policy board." Monetary policy Jumps only one time, there will always be reasons speak supposedly for a continuation of this measure. "
Also in order to end the conflict in their own ranks, the ECB seeks to leave the bond purchases in the future the European rescue fund EFSF. In principle, this also had the euro-zone nations agreed at their emergency summit in July. How accurate are the possibilities of EFSF should be designed, but it is still unclear. Economists had proposed to equip the emergency fund with a bank license, so that he, like other banks also could get fresh money at the ECB for its bond purchases.
Weidmann also rejects this option. To secure its political independence, the central bank should not be used to finance government debt - "whether directly or via a detour," the Federal Bank chief said on Saturday after the meeting of EU finance ministers and central bank chiefs in Wroclaw.