Italian yields 'no big issue': Bundesbank chief

14th November 2011, Comments 0 comments

Italian bond yields, currently very high, are not "such a big issue" and there is no need for the European Central Bank to do more to help Italy, Bundesbank chief Jens Weidmann said on Monday.

Fears of a prolonged political and financial crisis pushed up Italy's borrowing costs to record levels of around 7.0 percent last week, setting off alarm bells around Europe and warnings that the Italian economy was too big to be rescued.

"Of course this level may not be sustainable in the long run if there is a lack of fiscal discipline and economic growth remains low. But in the short run I do not think it is such a big an issue," Weidmann told the Financial Times in an interview.

"What we are facing in Italy is an acute confidence crisis, and only the Italian government can resolve that crisis by implementing what has been announced. Italy is very different from Greece in a lot of respects. I'm confident that Italy will be able to deliver."

Weidmann, who as Bundesbank president sits on the ECB's governing council, said additional intervention to help Italy on the part of the ECB was not allowed under treaty rules.

"I cannot see how you can ensure the stability of a monetary union by violating its legal provisions," he said.

© 2011 AFP

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