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Fed bank boss wants deeper cuts

The Local · 1 Jan 2012, 13:21

Published: 01 Jan 2012 13:21 GMT+01:00

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In an interview to be published in Monday's edition of the Tagesspiegel newspaper, Weidmann said, "As the stability anchor for the common currency, Germany carries a special responsibility."

The Bundesbank head welcomed the fact that the state significantly reduced its deficit last year, but said this was no time to ease off from such efforts.

Weidmann sees a particular problem in Germany's looming first instalment for the permanent euro bailout fund, the European Stability Mechanism (ESM), which has not only been raised, but brought forward to this year.

Finance Minister Wolfgang Schäuble is faced with the tricky decision of either financing the contribution – thought to be higher than €4.3 billion – by taking on new debts or by imposing bigger federal budget cuts.

Unlike the temporary European Financial Stability Facility (EFSF) currently in place, the ESM will have to be backed with its own capital.

But Weidmann also remained optimistic for 2012, since Germany's economic situation was "relatively favourable." For that reason, the top banker warned against "talking" the country into a credit crunch, pointing out the European Central Bank (ECB) would provide the banks with enough liquidity.

Weidmann also insisted that the Bundesbank would not be playing a more active role in the euro crisis by buying up state bonds from troubled countries.

Story continues below…

DPA/The Local/bk

The Local (news@thelocal.de)

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Your comments about this article

17:10 January 1, 2012 by coffejohn
I`m all right jack?

This Common Market is getting very common.
14:35 January 2, 2012 by Englishted
I somehow think we may see yet another example of "do as I say not as I do",

when he cuts his wages , holidays and increases his hours then I will take a bit of notice.
09:45 January 4, 2012 by heyheyhey
Why would you even care about what he does, Englishted? Will it have an impact on your income? Do you live and work in Germany? I know, you simply have to run your mouth.
10:57 January 5, 2012 by coffejohn
If German policy ruins the EZone then that will affect everybody in the EU.

To repeat my comment above:

I`m all right jack?

This Common Market is getting very common.
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