Chancellor Angela Merkel on Monday issued one of her clearest endorsements yet of a European Central Bank plan to buy the bonds of troubled eurozone nations, but warned of the dangers of increasing the money supply.
“The German government has made very plain that it believes that the need to keep the value of money stable justifies the most recent ECB decisions, but we have also made very clear that boundaries are clearly set in the European treaties,” she told reporters.
“Any financing of states, meaning fiscal action by the ECB, is not appropriate,” she said, in a warning over the inflationary risks of printing money as a means of easing financial problems. ECB chief Mario Draghi announced strict terms this month for nations that ask the ECB to buy their bonds.
“Mario Draghi made clear that this was all about monetary policy and that is important,” Merkel said.
“It is obviously the motivation of the ECB to say we will act in monetary policy terms, but only if the reform efforts in the individual countries do not stop or ease off. And I consider not easing off in reform to be very important,” the chancellor added. - Sapa-dpa