* Calls for governments to press ahead with reforms
* Wants abolition of implicit guarantees for banks and sovereigns
* Says tighter fiscal rules needed
AIX-EN-PROVENCE, France, July 7 The European Central Bank cannot solve the euro zone crisis, Bundesbank chief Jens Weidmann will tell economists on Sunday, pressing the bloc's governments to get their economies in shape and tighten their fiscal rules.
Weidmann is addressing an economists' conference in Aix-en-Provence, southern France, only three days after the ECB broke with precedent by declaring that it intends to keep interest rates at record lows for an extended period and may yet cut further in response to turbulence caused by the U.S. Federal Reserve's plan to slow monetary stimulus.
"Monetary policy has already done a lot to absorb the economic consequences of the crisis, but it cannot solve the crisis," Weidmann is due to say in his speech, which was released to the media in advance.
"This is the consensus of the Governing Council. The crisis has laid bare structural shortcomings. As such, they require structural solutions."
Weidmann, widely recognised to be the most hawkish member of the ECB's 23-man Governing Council, does not want the bank to intervene too strongly in tackling the bloc's economic crisis, thereby allowing governments to soft-pedal reforms.
"To fully unleash the common currency's potential, efforts are needed on two fronts: structural reforms as well as the abolition of implicit guarantees for banks and sovereigns (government bonds)," he will say.
While he does not see sufficient support in the euro zone for governments to give up sovereignty on fiscal matters to forge a fiscal union, Weidmann will press them to stiffen Europe's fiscal rules.
"In addition to stronger rules, we need to make sure that in a system of national control and national responsibility, sovereign default is possible without bringing down the financial system. Only then will we really do away with the implicit guarantee for sovereigns."
The Bundesbank chief will also call for euro zone governments to sever what he describes as the "excessively close links" between banks and sovereign governments, saying that European banks hold too many of their own governments' bonds.
"This is because banks do not have to hold any capital against their government debt, as the risk-weight assigned to sovereign bonds is zero.
To counteract excessive investment in sovereign bonds, Weidmann believes that the capital rules need to be changed to take account of risk and exposure levels.
"Only then will banks be able to cope with the repercussions of sovereign default."
The Pentagon releases photographs linked to allegations of abuse of detainees in Iraq and Afghanistan.