FRANKFURT (Reuters) – The euro zone has not yet been made crisis proof, so the European Central Bank is still at risk of having to function as a crisis-response unit, a risk to its independence, Bundesbank President Jens Weidmann said on Tuesday.
“Certain issues like the lack of credibility of fiscal rules or the harmful sovereign-bank nexus still have to be adequately addressed,” Weidmann said in a speech in Pretoria, which did not discuss current monetary policy.
He argued that fighting crises forces unelected central bankers to take political decision, which are difficult to square with democratic principles and may go beyond banks’ narrowly defined mandate.
“Acting beyond the mandate would also undermine people’s trust in the central bank,” Weidmann said. “At the end of the day, it could become more and more difficult for the European Central Bank to focus on its promise of a stable currency.”
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.