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Another aspect of German intransigence: determination to keep the euro high, even if the resulting terms of trade are disadvantageous to other EZ countries (one of France's "competitiveness" problems):

Jens Weidmann warns of a currency war

What do you expect? If you oppose lower interest rates, and asset purchase programmes, as Jens Weidmann has done, it should not come as a surprise that the ECB's monetary policies are now the hardest, relative to all the other major central banks. The Financial Times reports that Weidmann is now warning that the erosion of central bank independence would unleash a round of competitive devaluations. He said there have been several recent examples of an erosion of central bank independence, most notably in Hungary and now in Japan. Whether intended or not, one consequence is an increasing politicisation of the exchange rate, he said.

(Eurointelligence, daily briefing by e-mail)

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jan 22nd, 2013 at 05:15:55 AM EST

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