Joint EU debt must not become a regular thing: Germany’s Weidmann By Reuters

© Reuters. 29th Frankfurt European Banking Congress (EBC) takes place in Frankfurt

BERLIN (Reuters) – A decision by European leaders to issue joint debt to finance coronavirus aid for weaker member states should remain an exemption and not serve as a blueprint for future budget challenges, Bundesbank President Jens Weidmann said on Sunday.

European Union leaders on Tuesday clinched an historic deal on a massive stimulus plan for their coronavirus-throttled economies following a fractious summit lasting almost five days.

The agreement paves the way for the European Commission, the EU’s executive, to raise up to 750 billions euros on capital markets on behalf of all 27 states, an unprecedented act of solidarity in almost seven decades of integration.

“It’s important that the EU has proven its capability to act in the crisis,” Weidmann told Funke media group in an interview, adding that showing solidarity also in financial terms was the right thing to do in the current crisis.

But Weidmann added the agreed debt mechanism should remain an exemption and that strict conditions had to be attached to the financial aid.

“Control mechanisms are needed to ensure that funds are used sensibly and efficiently,” Weidmann said.

“Generally, I think joint debt for extensive transfers is questionable. At the very least, the package should not serve as a springboard for large-scale EU debt for regular household financing,” he said.

The central bank chief also pointed to the current developments in the United States, an important trading partner for Germany.

“The U.S. loosened some of its measures early on and is now tightening them up again in some places. This stop-and-go is certainly difficult for the economy,” Weidmann said.

“In any case, this shows how important it is to stay vigilant, to closely monitor the infection process and to prevent a flare-up.”

Turning to Germany, Weidmann said Europe’s largest economy had passed the peak of the pandemic as well as the low point of the economic crisis. Retail sales were picking up again and production was also increasing.

“Overall, the data shows that the economy bottomed out in spring and is now gradually recovering,” Weidman said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

{n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments)};
s.parentNode.insertBefore(t,s)}(window, document,’script’,
fbq(‘init’, ‘751110881643258’);
fbq(‘track’, ‘PageView’);

by : Reuters

Source link

Capital Media

Read Previous

even if drivers win, they need new laws to protect them

Read Next

Le Maroc adopte la carte d’identité nationale électronique, munie de puce et code-barre