ECB & Bonds

Interview with Bundesbank President Weidmann. Full Der Spiegel interview here.

SPIEGEL: It’s just that it doesn’t do any good. The two German members of the ECB Council are opposed to buying up the bonds of deeply debt-ridden euro countries like Greece, Portugal, Ireland and Italy, but for months now representatives from southern Europe have outvoted you on this issue.

Weidmann: Just because you don’t have a majority for your position at all times doesn’t mean you should stop defending it.

SPIEGEL: But the number of your allies is constantly shrinking. When the ECB Council debated the purchase of Italian bonds in early August, only you and ECB chief economist Stark reportedly voted against it.

Weidmann: One of the customs of the euro system is not to discuss voting behavior. Nevertheless, my position on the purchases of government bonds is sufficiently known. As a result of many of our monetary policy measures, we helped prevent the crisis from escalating. However, the euro system added substantial risks to its balance sheet as a result. The necessary distinction between fiscal and monetary policy is being blurred, and individual measures are associated with special risks. That’s why these risks have to be reduced.