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Weidmann rejects Greek criticism of ECB, puts onus on governments to help Athens
March 12, 2015 / 10:07 AM / 3 years ago

Weidmann rejects Greek criticism of ECB, puts onus on governments to help Athens

Jens Weidmann, chief of Germany's Bundesbank, smiles as he arrives for the yearly news conference in Frankfurt, March 12, 2015. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - ECB policymaker Jens Weidmann put the onus squarely on governments on Thursday to decide whether they wanted to cover Greece’s funding needs, saying this was “less than ever” a task for the euro zone’s central banks.

Rejecting the Greek finance minister’s characterization of ECB policy toward Athens as “asphyxiating”, Weidmann said Greece had lost a lot of trust and that he did not see the country regaining access to capital markets by mid-year.

“It’s not because of the ECB that the Greek government has no access to markets,” Weidmann said in response to a question from Reuters, rejecting the “asphyxiation” charge made by Greek Finance Minister Yanis Varoufakis.

Weidmann made his comments just as German Finance Minister Wolfgang Schaeuble told Reuters it was “nonsense” to suggest he had insulted Varoufakis, rejecting Athens’ complaint that he called his Greek peer “foolishly naive” in his communications.

Weidmann said governments and parliaments must decide whether they were willing to further increase their exposure to Greece and cover the Greek state’s financing needs.

“This is less of a task for the Eurosystem (of euro zone central banks) than it has ever been,” he said.

One option the Greek government has looked at to fund itself is for the European Central Bank to raise a cap on Athens’ issuance of Treasury bills, or short-term debt.

But Weidmann, who is chief of Germany’s Bundesbank, said the euro zone’s central banks should ensure Greece’s banks do not worsen their liquidity position by buying up Greek government debt for which he said there is still no market.

Reporting a fall in the German Bundesbank’s 2014 profit due to reduced interest income, Weidmann also said a rosy outlook for Germany’s economy was no reason to turn a blind eye to risks such as geopolitical tensions and a demographic shift.

“Complacency in economic policy matters has no place in Germany,” said Weidmann, whose role as Bundesbank president gives him a seat on the ECB’s policymaking Governing Council.

In the near term, the German economy should grow “somewhat” beyond its normal capacity utilization level this year, and perhaps even more strongly in 2016, he added.

Weidmann told Reuters “the German economy is in very robust shape” and that the Bundesbank would have to revise up its 2015 growth forecast to around 1.5 percent this year. In December, the Bundesbank projected 2015 growth of 1.0 percent.

“As the economic environment should remain positive, the decline in jobless figures should continue this year,” he said.

Further out, Germany faced economic challenges.

“The unfavorable demographic outlook will weigh heavily on the German economy in the medium term,” Weidmann said.

Additional reporting by Frank Siebelt; Editing by Catherine Evans

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