German finance minister Wolfgang Schäuble said there is no rolling back the reform course in the EU and that resorting to any form of debt-sharing would lead to Europe’s demise.
Schäuble, speaking to a meeting of insurers in Berlin yesterday, said he had told the ECB of the risk that its monetary policy set “wrong incentives”. Rather, it’s necessary for countries to “stay the course” agreed upon by policy makers during the eurozone debt crisis that emerged in Greece four years ago, he said.
“Any mutualisation of liabilities, in whatever shape, would lead to the contrary,” Schäuble said.
“It would mean the decline of Europe in a rapidly changing world. That’s why monetary policy also mustn’t create the wrong incentives.”
The remarks suggest Schäuble backs the view of Bundesbank chief Jens Weidmann, who warned against further loosening of monetary policy.
The ECB has cut its benchmark lending rate to a record low of 0.25% and is considering a smaller-than-normal cut in the deposit rate if officials decide to take it negative for the first time, according to two people with knowledge of the debate.
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