German Central Bank Governor Warns Crisis not Over

Jens Weidman the German central bank chief has always erred in the side of caution and has been critical of the rest of the ECB’s proposals. The statements today will bring a battle of statements as it singles out France as not doing enough to contain the crisis. The two nations have met on different sides of the eurogroup’s budget talks and now on how to tackle domestic deficits.

The euro zone crisis is not over, France’s reforms are slipping and the Bundesbank has set aside billions in new provisions against what it sees as risky European Central Bank moves, Germany’s central bank said on Tuesday.

Presenting Bundesbank 2012 results that showed a sharp increase in its risk provisions, the German central bank’s chief, Jens Weidmann, urged governments to tackle the roots of their troubles with reforms.

Weidmann, a member of the ECB’s Governing Council, opposed the bank’s yet-to-be-used bond-buy plan agreed last September and believes euro zone governments must shape up their economies to exit the crisis rather than looking to the ECB for help.

“The crisis is not over despite the recent calm on financial markets,” Weidmann told a news conference.

There was uncertainty about the reform course in Italy and Cyprus, he said, adding: “The reform course in France seems to have floundered”.

via Reuters

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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