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Most of the coverage in Germany's press focused on the Bundesbank's budget, while Borsenzeitung picked up on a much more important issue. Jens Weidmann said he was opposed to proposals that the ECB should take further action to counter, through unconventional policies, to counter the credit crunch in southern Europe. He said this was not a matter for the central banks, but for national investment banks in the member states.  He said there were many reasons why interest rates are high in several countries. One factors is the level of national debt. The article also quoted Benoit Coeure as saying the ECB is seriously concerned about the broken transmission mechanisms.

Weidmann also said during the press conference that the Bundesbank opposed negative deposit rates.

(It will be hard for Mario Draghi to keep outvoting the Bundesbank, as a result of which Weidmann's opposition to any more ECB action should be taken seriously.)

Weidmann warns France over budget

Really none of his business, but this has never stopped Jens Weidmann from constantly talking about fiscal policy. Yesterday, he said the French efforts of budget consolidation appears "to have floundered", according to the FT. President Francois Hollande yesterday declared that the French budget deficit will come in at 3.7% in 2013 "even though we will try to make it lower". Weidmann admonished the French by saying that it was particular important that the big countries signalled their commitment to the new stability and growth pact by taking them seriously. Hollande, by contrast, said that he rejected austerity policies that would weaken growth.

Weidmann lowers Bundesbank profits to demonstrate the cost of the euro rescue

The annual transfer of profits by the Bundesbank to the German government is a much watched ritual in Germany politics. Yesterday the Bundesbank presented its annual results, which came as a bit of a shock. Wolfgang Schauble had budgeted for €1.5bn in profits for last year, but the Bundesbank will only be sending €664m. The difference is due to further risk provision, Jens Weidmann said yesterday. The total risk provisions are €6.7bn. Suddeutsche Zeitung writes, even worse for Schauble, is that the remaining profit is almost entirely eaten up by the agreement to transfer profits on NCB Greek bond holding back to Athens. That almost eliminates the Bundesbank's net profits for 2012. The SPD immediately seized on those data, saying that they represented the cost of Angela Merkel's euro rescue policies.

(That sentiment was also underlined yesterday by Gerhard Schroder, who made an appearance at the SPD's parliamentary party, where he said by being constantly late, Merkel is costing the German taxpayer a lot of money.)

The Bundesbank may yet succeed in their goal of having a repeat of the 1992 Exchange Rate Mechanism crisis just to show the world who's boss.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Wed Mar 13th, 2013 at 05:02:27 AM EST
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