BERLIN (MNI) – ECB Governing Council member Axel Weber on Thursday
criticized the Irish government for having given a full guarantee for
the banking sector of the country.
“The failure of a bank is as normal as the success of a bank,”
Weber said in a panel discussion at a banking conference here. “I do not
think it is necessary to give a blank guarantee” for banks, he stressed.
Commenting on the sovereign debt crisis in the Eurozone, Weber
reaffirmed his opposition against purchases of government bonds by the
ECB, the European Financial Stability Facility (EFSF) or the future
European Stability Mechanism (ESM). This would set the wrong incentives
for indebted countries, he argued.
Weber said he was more worried about the narrow bond spreads of the
past in the Eurozone — which were an underpricing of risks — than
about the current large spreads. While the current “overshooting” of
spreads will still last for a while, the markets are moving towards a
normalisation of spreads, he argued. In the end, spreads will still be
higher than before the crisis, the outgoing Bundesbank president
predicted.
He criticized the decision not to include a clause under which
future aid from the ESM would automatically require private creditors to
shoulder part of the losses when member states couldn’t pay their debt.
“This needs to be completely automatic; I don’t see any problem with
that,” he said.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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