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ECB Weidmann: Central Banks Can't Be Burdened By Sovereign Measures -Report
FRANKFURT -(Dow Jones)- Further measures aimed at fighting Europe's sovereign crisis must be made by euro-zone governments and parliaments rather than by central banks, which risk endangering their mandate to maintain price stability if burdened by non-standard measures, European Central Bank Governing Council Member Jens Weidmann said in an interview published Tuesday in Germany's Sueddeutsche Zeitung.
"If additional tasks and financial risks are always pushed into monetary policy, it can endanger their (central banks') mandate to provide price stability," Weidmann said.
Weidmann further said he doubted that a Berlin-backed proposal to extend the maturities on Greek sovereign debt with voluntary support from private sector creditors would raise enough money to temporarily resolve the country's debt problems. With the exception of Greek banks, private holdings of Greek debt " haven't for a while been as high as is often speculated," Weidmann said.
"There's nothing to argue against a voluntary maturities extension. But it remains open how high the willingness of private creditors really is," he said.
Additionally, politicians can't assume that central banks would continue to accept Greek debt with extended maturities as collateral, Weidmann warned, adding that such an extension would do nothing to address Greece's structural economic problems.
"I'm firmly convinced that there's no other way to sustainably solve the structural problems than the comprehensive reform program" agreed to by Greece, Weidmann said.
FRANKFURT -(Dow Jones)- Further measures aimed at fighting Europe's sovereign crisis must be made by euro-zone governments and parliaments rather than by central banks, which risk endangering their mandate to maintain price stability if burdened by non-standard measures, European Central Bank Governing Council Member Jens Weidmann said in an interview published Tuesday in Germany's Sueddeutsche Zeitung.
"If additional tasks and financial risks are always pushed into monetary policy, it can endanger their (central banks') mandate to provide price stability," Weidmann said.
Weidmann further said he doubted that a Berlin-backed proposal to extend the maturities on Greek sovereign debt with voluntary support from private sector creditors would raise enough money to temporarily resolve the country's debt problems. With the exception of Greek banks, private holdings of Greek debt " haven't for a while been as high as is often speculated," Weidmann said.
"There's nothing to argue against a voluntary maturities extension. But it remains open how high the willingness of private creditors really is," he said.
Additionally, politicians can't assume that central banks would continue to accept Greek debt with extended maturities as collateral, Weidmann warned, adding that such an extension would do nothing to address Greece's structural economic problems.
"I'm firmly convinced that there's no other way to sustainably solve the structural problems than the comprehensive reform program" agreed to by Greece, Weidmann said.
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