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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