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From today's Eurointelligence:
ECB attacks Weidmann over ,,devastating signal" on target balance

According to Der Spiegel, there is outrage at the top of the ECB about Jens Weidmann's letter to Mario Draghi criticizing the generous conditions for banks in the 3y LTRO's and the consequences this has on the Target balances, Der Spiegel reports. The magazine claims that within the ECB this was greeted as a ,,devastating signal". Weidmann told the weekly that with the 3y LTRO's and the simultaneous loosening of collateral requirements the euroystem's central banks had taken considerable risks on their balance sheets that were ,,at the limits of their mandate". The Bundesbank president urged his colleagues to tighten those standards again as soon as possible. However there is disagreement with other powerful Governing Council members. Banque de France governor Christian Noyer warned against a precipitated exit from the ultra-loose refinancing measures. ,,We can do that once the crisis is over", Noyer said. ,,During this crisis the central banks had to invent new instruments", he said adding that the ECB's main aim remained insuring price stability. Also Handelsblatt's ,,shadow council"of senior economists criticized Weidmann for going public with his criticism on the 3y LTRO's and the Target balances.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Mon Mar 5th, 2012 at 05:41:23 AM EST
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