FRANKFURT (MNI) – Central banks may not simply forget about part of
the Greek government’s obligations towards them in order to make a
private sector debt reduction deal possible, European Central Bank
Governing Council member Jens Weidmann said in a newspaper interview
released Tuesday.
“The central banks may not give away the assets entrusted to them,”
the head of the Bundesbank told Germany’s financial daily Handelsblatt.
“The critical point is that we are not allowed to waive claims vis-a-vis
a government. That would be a form of monetary financing.”
The paper said Weidmann questioned Greece’s reform capability.
“That which has now been decided is an important step,” he said in
reference to the Greek parliament’s approval Sunday night of a new
austerity package.
“But in the end, what is decisive is the implementation of the
measures, and for this there has to be an administration that implements
the measures, and a population that accepts them,” he added.
On another topic, Weidmann said that the German central bank needed
to build higher reserves and that this would affect its bottom line.
“It is obvious that due to the increased risks, we need more
reserves rather than fewer,” he said, adding that “this has a
corresponding effect on the level of the Bundesbank’s profit.”
The Bundesbank transfers any profit to the German federal
government.
–Frankfurt bureau tel.: +49-69 720142. Email: dbarwick@marketnews.com
[TOPICS: M$Y$$$,M$$CR$,M$X$$$,MGX$$$,M$G$$$,M$$EC$,MT$$$$]