FRANKFURT (MNI) – The European Central Bank has reached the limit
of its mandate, especially in the use of its non-conventional measures,
ECB Governing Council member Jens Weidmann said in an interview
published Friday morning.

“In the end, these [measures] are risks for taxpayers, most notably
in France and Germany,” the Bundesbank chief told France’s daily Le
Monde.

Commenting on the ECB’s longer-term refinancing operations,
Weidmann said that the measures had bought time, but have not resolved
the structural issues of the crisis.

“It’s like morphine,” Weidmann said. The LTROs “provide relief from
the pain, but are not a cure for the illness. They could even have side
effects, including delayed adjustments in the banking sector, for
example.”

Weidmann also reiterated his opposition to the idea of granting a
banking license to the European Stability Mechanism so that it could
obtain funding directly from the ECB. He opposes such a move, he said,
because it would amount to “subjugating monetary policy to budget
policy, which greatly harm the credibility of the ECB. And also because
monetary financing of states, for good reasons, is strictly prohibited
by the [EU] treaties.”

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com

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