German Chancellor Warns EU Governments to Not Slack on Reforms

Germany’s Chancellor Angela Merkel said Monday that any action taken by the European Central Bank must not take the pressure off EMU member states to raise their competitiveness.

“I only have one request [to the ECB]: It must be avoided that ECB action could be seen in any way as putting on the back burner what must be done in the area of fiscal policy and competitiveness. It can happen very quickly that it seems one can replace the other,” Merkel said during a speech at Deutsche Boerse headquarters in Eschborn near Frankfurt.

ECB President Mario Draghi and his colleague on the ECB Governing Council, Bundesbank President Jens Weidman, were also present.

It is widely expected that the ECB will unveil a quantitative easing programme at its next policy meeting Thursday.

Merkel called on euro area governments to press ahead with reforms so long as conditions are favourable.

Stressing that debt finance was cheaper than ever, she said that “If you can’t consolidate your budget under these circumstances, then I don’t how this should happen when the interest rates start rising again one day.”

After media rumours earlier this month that Merkel would be willing to countenance a exit of Greece from the Eurozone if necessary, she reiterated that “The policy of the German government has always been that Greece should remain part of the Eurozone.”

However, the German chancellor added that the solidarity shown to Greece had to be reciprocated with responsibility from Greece “even after the election day.”

via EFXNews

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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