–ECB Weidmann: ‘Reflexive’ Call for ECB Intervention Worrying
–Weidmann: Eurozone Situation Remains Fragile; Crisis Not Overcome

By Chris Cermak

WASHINGTON (MNI) – German Finance Minister Wolfgang Schaeuble
Friday said finance ministers the Group of Seven “fully agree” the
Eurozone has undertaken the necessary actions to tackle its sovereign
debt crisis.

Speaking at a press conference in Washington, Schaeuble declared
the Eurozone’s own actions were therefore no longer the “focus” of this
week’s IMF Spring Meetings, and he rejected as “nonsense” calls for
Germany to do more to boost European economic activity.

“Europe has delivered,” Schaeuble said, adding that ongoing talks
over the next step — bolstering the IMF’s own resources — were “out of
Europe’s hands” and would be discussed by the G20 later Friday.

European Central Bank member Jens Weidmann, speaking at the same
press conference, said he remained worried about “reflexive” calls for
more ECB intervention to aid struggling peripheral nations and warned
against relaxing economic reforms and bank deleveraging in Europe.

“The stablization of the euro area remains fragile,” Weidmann said.
The crisis was “not yet overcome,” as Europe continued to suffer from a
“crisis of trust” in markets.

Weidmann said their remained core structural problems and
competitiveness issues in the Eurozone which “ECB monetary policy cannot
solve.” The ECB’s role, as well as the European firewall, “should not be
provided in such a way that the drive for reform is weakened.”

Weidmann again rejected calls — including from the IMF — for the
European firewall to be given power to intervene directly in struggling
banks, arguing this would prevent European leaders from imposing
conditions, as they have done with loans to sovereigns.

Taking direct stakes in banks would “remove a core element of the
EFSF, and that is conditionality,” Weidmann said.

Schaeuble said Spain’s finance minister had given a “convincing”
presentation to G7 ministers Thursday over planned structural reforms
and measures to curb its fiscal deficits.

“The Spaniards are not over the hill, but they are delivering what
they can,” Schaeuble said.

On the global economy, Weidmann said the outlook was “somewhat
improved” though there remained downside risks. The Eurozone crisis
remained the “most meaningful risk” to the global economy.

Weidmann said the economic argument for Germany taking more steps
to boost economic activity was “highly questionable,” arguing even if
Germany did boost its economy it would have only a “small effect” on
struggling European peripheral nations.

** MNI Washington Bureau: 202-371-2121 **

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