Bundesbank chief cites 'progress' at EU summit, urges action

11th December 2011, Comments 0 comments

The head of Germany's Bundesbank said Sunday that last week's EU summit represented "progress" towards resolving the debt crisis, but stood firm in his opposition to a greater role for the Central European Bank.

"Indeed I see progress in the decisions of the summit," Jens Weidmann said in an interview published Sunday by the Frankfurter Allgemeine Sonntagszeitung weekly, after EU leaders agreed to tighter budgetary discipline at a summit in Brussels on Friday.

However, he said: "All the parties concerned must now implement their announcements or every attempt at resolving the crisis will run into the wall."

Weidmann, whose institution symbolises strict budgetary orthodoxy, also insisted: "The summit confirmed it: finding a solution to the crisis is the duty of governments," and not central banks.

Some observers have theorised that the ECB could intervene massively in favour of struggling states once a political accord is reached on a new budgetary pact.

ECB president Mario Draghi tempered these hopes last week, and Weidmann, who sits on the ECB's board of governors, Sunday repeated his opposition to such a step.

"Financing of public debts by printing money is and remains forbidden by the (EU) treaties," he said.

A large majority of economists however expect that the BCE will intervene at a greater level as the only body capable of preventing the collapse of the eurozone in the short term.

© 2011 AFP

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