‘Euro crisis could last a decade’Comment on this story
Frankfurt - The European debt crisis could take a decade to overcome, ECB council member Jens Weidmann said in an interview Wednesday, adding that the central bank could cut interest rates if new information warranted such a move.
“Overcoming the crisis and the crisis effects will remain a challenge over the next decade,” Weidmann - who is president of Germany's central bank the Bundesbank - told the Wall Street Journal.
His view contrasts with recent comments from European Commission President Jose Manuel Barroso that the worst of Europe's crisis is over.
Weidmann said the European Central Bank could cut interest rates below their current record low rates if necessary, but that doing so may not actually prove very effective.
“We might adjust in response to new information,” however, “I don't think that the monetary-policy stance is the key issue,” said Weidmann.
The ECB slashed its key interest rate to an historic low of 0.75 percent last July and held it there ever since.
Financial markets have nevertheless speculated on a further cut in order to pull the eurozone economy out of recession.
But ECB officials have consistently argued that additional monetary easing might not actually prove very effective as the low level of interest rates was not feeding through to those economies in the 17-country euro area that needed it most.
“Everyone is asking what more can the central bank do instead of asking what other policy makers can contribute,” Weidmann said.
The Bundesbank chief has long expressed concern that central banks are under too much pressure from politicians to spur growth in their economies through ultra-low interest rates and other stimulus.
“A point that I think is important to make - perhaps less for my central bank colleagues than for finance ministers - is that the medication monetary policy makers administer only cures the symptoms and that it comes with side-effects and risks,” he argued. - Sapa-AFP