Germany’s Schaeuble Warns Against Pressure on ECB to Weaken Euro

German Finance Minister Wolfgang Schaeuble warned against political pressure from euro region governments to weaken the single currency and urged policymakers not to “hide behind” the European Central Bank.

“If the ECB’s independence and the limits on its mandate didn’t already exist, we would have to invent them at a time when the ECB is expected to solve too many problems,” Schaeuble said today in Berlin. “These are extraordinary times for our monetary policy. They should remain extraordinary and they should come to an end soon.”

Central bank policies around the world aiming to boost liquidity and improve the supply of credit have increased the risk of new financial bubbles and ultimately of new crises, Schaeuble said. There’s a high risk now of investors taking “irresponsible and reckless” decisions thanks to abundant liquidity, he said.

ECB President Mario Draghi said after the bank’s May 8 policy meeting, which kept interest rates on hold, that officials are “comfortable” with acting next time and willing to use unconventional instruments if needed. German stocks rose for a fifth day, advancing 0.4 percent, after the benchmark DAX Index last week posted its longest streak of weekly gains since November.

Spanish Prime Minister Mariano Rajoy joined his French counterpart Manuel Valls April 8 in criticizing the ECB for not acting against the strong euro, which they say is hampering euro-area economic recovery. Schaeuble said “competition to achieve the weakest currency would be disastrous.”

“We in Europe need to continue in our efforts. Most importantly we need to make sure we don’t hide behind monetary policy,” Schaeuble said. “Monetary policy is not a substitute for reforms,” he said, warning there’s “a danger that monetary policy could weaken the willingness of policymakers to undertake reforms.”

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