ECB’s Weidmann Details Risk for Europe’s Taxpayers

European taxpayers should not be left accountable for the securities that form part of the European Central Bank’s (ECB) new asset-purchase program, Jens Weidmann, the president of the Deutsche Bundesbank has told CNBC.

The central bank is about to embark on the purchase of asset-backed securities (ABS) in an attempt to boost the region’s economy and boost inflation. This means euro zone banks would sell the ECB their loans and other types of credit that have been packaged together. The ECB has said that it would only purchase less risky “senior” tranches of securitized debts and loans, but also wants to purchase riskier “mezzanine” tranches which are deemed to be more effective.

These riskier tranches would require public guarantees, according to ECB President Mario Draghi, which is the stumbling block for Weidmann, who is also a member of the ECB’s Governing Council.

CNBC

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