18 Jul 2014
ECB Weidmann: Too long period of low inflation could paralyse Eurozone economy
FXStreet (London) - Speaking at the Madrid Stock Exchange today, Jens Weidmann, president of the Deutsche Bundesbank and European Central Bank governing council member, said that the crisis has: “laid bare shortcomings at the national level as well as weaknesses in the monetary union's institutional architecture.”
“Repairs at the national level have seen considerable progress, though there is still a long way to go,” added Wiedmann, likening the process to a marathon. “he second half of the course always feels tougher than the first - and one major challenge is to not give in to the growing reform fatigue.”
“But at this point, the weaknesses in EMU's architecture probably pose a more fundamental challenge. The balance between liability and control has got out of kilter. We need to regain that balance if we are to put EMU on a more solid footing.”
“Since a genuine fiscal union is not on the cards - and to me, it does not seem to be for the foreseeable future - we need to make the principle of individual responsibility work. But we also need to put an end to the preferential treatment afforded to sovereign debt in order to immunise the financial system against sovereign default.”
“Repairs at the national level have seen considerable progress, though there is still a long way to go,” added Wiedmann, likening the process to a marathon. “he second half of the course always feels tougher than the first - and one major challenge is to not give in to the growing reform fatigue.”
“But at this point, the weaknesses in EMU's architecture probably pose a more fundamental challenge. The balance between liability and control has got out of kilter. We need to regain that balance if we are to put EMU on a more solid footing.”
“Since a genuine fiscal union is not on the cards - and to me, it does not seem to be for the foreseeable future - we need to make the principle of individual responsibility work. But we also need to put an end to the preferential treatment afforded to sovereign debt in order to immunise the financial system against sovereign default.”