7 Apr 2014
Buba's Weidmann says his view on QE remains unchanged
FXStreet (Łódź) - Bundesbank head Jens Weidmann said on Monday in Amsterdam that he hadn't changed his view on QE, contradicting Mario Draghi's words last week that ECB policymakers are unanimously in favor of considering various instruments including asset purchases.
Furthermore, Weidmann called for ending the preferential treatment given to sovereign debt, which is treated by European regulator as risk-free. The monetary union has to be a stability union, he emphasized.
Weidmann also agreed with Dutch central bank chief Klaas Knot that after establishing the Single Supervisory Mechanism using ECB's credibility, the SSM should become a separate institution in order not to overburden the central bank's monetary policy.
Finally, Weidman stressed the importance of EU countries continuing to implement the necessary fiscal and economic reforms.
"Overcoming the crisis is still an uphill struggle; if you don't go forwards, you go backwards," he said. "With regard to reforms, governments therefore have to keep the pedal to the metal.”
Jamie Coleman from FXBeat sees Weidmann's stance as another sign that the ECB remains a “fractious” institution, which continues to ignore the deflation risk.
“If they maintain this present path, the euro will strengthen, further fueling the disinflationary trend,” he observes. “Time for the ECB to stop messing around and at a minimum communicate with one voice.”
Furthermore, Weidmann called for ending the preferential treatment given to sovereign debt, which is treated by European regulator as risk-free. The monetary union has to be a stability union, he emphasized.
Weidmann also agreed with Dutch central bank chief Klaas Knot that after establishing the Single Supervisory Mechanism using ECB's credibility, the SSM should become a separate institution in order not to overburden the central bank's monetary policy.
Finally, Weidman stressed the importance of EU countries continuing to implement the necessary fiscal and economic reforms.
"Overcoming the crisis is still an uphill struggle; if you don't go forwards, you go backwards," he said. "With regard to reforms, governments therefore have to keep the pedal to the metal.”
Jamie Coleman from FXBeat sees Weidmann's stance as another sign that the ECB remains a “fractious” institution, which continues to ignore the deflation risk.
“If they maintain this present path, the euro will strengthen, further fueling the disinflationary trend,” he observes. “Time for the ECB to stop messing around and at a minimum communicate with one voice.”