ECB money-printing shouldn't become 'unbound', says Weidmann

Send a link to a friend  Share

[June 22, 2020]  FRANKFURT (Reuters) - The European Central Bank's massive buying of government bonds shouldn't become a form of "unbound", permanent help to indebted governments, ECB policymaker Jens Weidmann said on Monday.

German Bundesbank President Jens Weidmann attends the 29th Frankfurt European Banking Congress (EBC) at the Old Opera house in Frankfurt, Germany November 22, 2019. REUTERS/Ralph Orlowski

The head of the Bundesbank defended the ECB's "flexible" purchases, which have been focussed on debt from struggling Italy, but said these should only be temporary.

"'Flexible' should not mean 'unbound'," Weidmann said in a recorded message. "Again, it is important to me that monetary policy does not set the wrong incentives for public finances."

He warned the ECB's ultra-easy policy will need to be tightened when the economic outlook allows to prevent the central bank from becoming "entangled with politics" and overburdened.

"Policymakers must not assume that we would keep the financing costs of governments low forever or iron out any differences in sovereign risk premia," Weidmann added.

(Reporting By Francesco Canepa; Editing by Balazs Koranyi)

[© 2020 Thomson Reuters. All rights reserved.]

Copyright 2020 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.

 

 

Back to top