European Central Bank board member Joerg Asmussen said policy makers must start to plan an exit from emergency lending measures that have pumped more than 1 trillion euros ($1.3 trillion) into the banking system, Die Zeit newspaper reported, citing an interview.
“The timing of the exit depends on developments in financial markets,” Asmussen said, according to Die Zeit. “Clearly it is still too early to begin, but we must start to carefully prepare the exit.” One shouldn’t assume the ECB will make any more three-year loans to banks, Asmussen was quoted as saying.
The debt crisis is not over and it’s unclear whether the current calm on markets is deceptive, he said. Governments should use the lull to press ahead with necessary reforms, Asmussen said.
There are signs the ECB’s loans are starting to gradually reach the real economy, Asmussen told Die Zeit. While there are no signs of speculative bubbles on European markets, “real- estate prices are rising appreciably in some regions of Germany and one must follow that carefully,” he was quoted as saying.
Monetary union can only work with economic and fiscal union, which involves giving up some sovereignty, Asmussen said. Asked if that means Europe needs to become more German, he said: “If you consider stable prices, sound fiscal policy and ecologically sustainable growth to be a German model, then Europe must become more German.”
At the same time, many other member states want to achieve exactly those things and Germany shouldn’t present itself as a taskmaster, Asmussen said.
He said he works closely with Bundesbank President Jens Weidmann and they value each other, Die Zeit reported.
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