German Central Banker on Solving Current Crisis

Jens Weidmann gave a speech at a French Business school earlier today:

Here are some excerpts:

With respect to the future, we all are focused on the same objective: a prosperous European Union and a stable single currency. However, it is the question of “how to get there” where opinions differ. This should be no surprise because it is indeed a tricky question. To paraphrase the American politician Hubert Humphrey: The solution is hammered out on the anvil of discussion, dissent and debate. So, I would like to highlight three issues where I feel that my view and the view of many decision-makers in Germany might differ from that of others.

Some say it would hurt growth if countries consolidated their public finances at great speed. In my view, consolidation is crucial for growth in the long term and not that bad for growth in the short term.

Some say Germany should do more to rebalance current accounts by reducing its competitiveness. In my view, instead of making one country weaker we have to make all countries stronger. Europe as a whole has to become stronger.

Some say monetary policy should do more to solve the crisis. In my view central banks must focus on price stability, must remain independent, and must not become too closely intertwined with fiscal policy.

In the next part of my speech I would like to explain the reasoning behind my positions.

For the full Speech visit the Bundesbank Site

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza