Make Kitco Your Homepage

Euro zone still not crisis proof, a risk to ECB: Weidmann

Kitco News

FRANKFURT (Reuters) - The euro zone has not yet been made crisis proof, so the European Central Bank is still at risk of having to function as a crisis-response unit, a risk to its independence, Bundesbank President Jens Weidmann said on Tuesday.

“Certain issues like the lack of credibility of fiscal rules or the harmful sovereign-bank nexus still have to be adequately addressed,” Weidmann said in a speech in Pretoria, which did not discuss current monetary policy.

He argued that fighting crises forces unelected central bankers to take political decision, which are difficult to square with democratic principles and may go beyond banks’ narrowly defined mandate.

“Acting beyond the mandate would also undermine people’s trust in the central bank,” Weidmann said. “At the end of the day, it could become more and more difficult for the European Central Bank to focus on its promise of a stable currency.”

Reporting by Balazs Koranyi, editing by Larry King

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.