BERLIN (AFP) – The head of Germany’s powerful Bundesbank sharply criticised what he called a radical new approach by the European Central Bank of easy money, in an interview published Sunday.
The central bank chief, Jens Weidmann, told Der Spiegel news weekly that the bank’s recent moves of setting interest rates at record lows while pumping liquidity into the financial system set a risky precedent.
The package of measures marks “a fundamental change of course and a decisive change for the ECB’s monetary policy”, he said.
“Whatever you want to say about the content of the decisions, the majority of the ECB Council is saying it is ready to go very far with monetary policy and break new ground.”
He said the policy went beyond encouraging banks to make private loans and amounted to pumping money directly into the real economy.
File photo shows a man holding a gold bar next to an employee of the German ‘Bundesbank’ (Federal Reserve Bank) Security Service (R) during a news conference at the headquarters of the ‘Bundesbank’ in Frankfurt/Main, Germany. The head of Bundesbank sharply criticised what he called a radical new approach by the European Central Bank of easy money – EPA
He added that plans announced this month by the ECB to launch an asset-backed securities purchase programme could, “depending on how it is set up”, eliminate “risk to banks at the expense of taxpayers”.
Weidmann said if the bank pressed ahead with the programme it should buy low-risk securities, although he questioned whether there were enough on the market to meet the volume the ECB has targeted.