The German government can’t let up in efforts to consolidate its finances as the country contributes to the stability of the euro area, Bundesbank President Jens Weidmann said.
“The government’s consolidation pause in the new year isn’t convincing given the growth scenario it is based on,” Weidmann said in an interview with Tagesspiegel. “Germany has a very special responsibility as the stability anchor of the currency union. It is about quickly reaching a structural budget balancing.”
Weidmann, who is a council member at the European Central Bank, said the last summit held by European Union leaders didn’t put the region on the path to a common fiscal policy. “It is certainly misleading to speak of fiscal union with the planned framework because national budget sovereignty remains,” the Berlin-based newspaper cited him as saying.
The rules agreed at the summit could “make a helpful contribution” he said, according to Tagesspiegel, which distributed his comments in an e-mailed summary today of an interview to be published in tomorrow’s edition.
European leaders pledged last month to tighten rules to curb future debts, added 200 billion euros ($259 billion) to their war chest, sped the start of a 500 billion-euro rescue fund and diluted a demand that bondholders shoulder losses in state bailouts.
The ECB must stick to its mandate of fighting inflation, the Bundesbank president said, the German newspaper reported.
“The necessary pressure on politicians can only be maintained if the ECB limits itself to carrying out its compulsory task and doesn’t just step into the breach for fiscal policy,” he said. “We have to make it clear where our legal, but also our real limits, are.”
While financial markets are still experiencing “considerable uncertainties,” the German economy will improve over the course of 2012 and the ECB is supplying sufficient liquidity to banks, according to Weidmann.