Friday, April 19, 2013

Germany urges ECB to reduce eurozone liquidity: Report

FRANKFURT: German Finance Minister Wolfgang Schaeuble said Friday the European Central Bank should try to limit the amount of liquidity in the eurozone, even if some countries were in a precarious situation.


"There is a lot of money in the market, in my view too much money," Schaeuble the business weekly Wirtschaftswoche in a pre-release of an interview to be published on Saturday.

"If the ECB tries to use what leeway it has to reduce this large amount of liquidity somewhat I would welcome that," he said.

But he added that "we in Germany should not forget that many European countries are still in a precarious economic situation."

Nevertheless, pumping liquidity into their economies without far-reaching structural reforms would not create the conditions for sustainable growth, the minister argued.

As well as cutting its key interest rates to historic lows in response to the long-running debt crisis, the ECB has also pumped unprecedented amounts of liquidity into banks to avert a disastrous credit crunch.

Schaeuble praised the ECB's efforts to contain inflation, which eased further to 1.7 percent in March.

"With an inflation rate of below 2.0 percent, one can only say that the ECB appears to be doing everything right at the moment," Schaeuble said.

indiatimes.com

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