FRANKFURT (MNI) – Crises risk putting too many responsibilities and
burdens on central banks, which must guard against efforts to loosen
their mandates in difficult times, European Central Bank Governing
Council member Jens Weidmann said Wednesday.
“The expectations for a central bank increase especially in
turbulent times, and therein lies the danger of overburdening,”
Weidmann, who heads the Bundesbank, said in prepared remarks at a cash
symposium hosted by his institution here.
Weidmann said “the euro is a stable currency,” in part because the
independence and price stability goals of monetary policy have not been
questioned. But he warned in this context: “The crisis calls for the
courage to change as well as the courage to maintain what has been
proven and to guard against co-optation or weakening.”
“A currency can only be stable if the public has trust in the
abilities of central banks and see their determination to maintain price
stability. This confidence was won by central banks over the past
decades and is their most valuable capital,” Weidmann said.
Weidmann, who has opposed the ECB’s bond-buying program unveiled
last month, said price stability was “rightly” the overriding goal of
European monetary policy. Though he did not refer to the bond-buy
program, Weidmann noted that the Maastricht Treaty had “clear rules”
that specifically made price stability the ECB’s primary goal and
prohibited monetary financing of governments.
Weidmann warned that central banks that are not independent of
states “lack the confidence that it will at all times give priority to
guaranteeing price stability.”
— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com
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