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April 22, 2013

German Banker Warns Crisis Far From Over

Germany’s top central banker warned that Europe’s debt crisis would take as much as a decade to overcome, adding that a lasting solution would only come once politicians stopped relying on the European Central Bank and pushed through far-reaching structural overhauls.

In an interview with The Wall Street Journal, Bundesbank President Jens Weidmann signaled that the ECB could reduce interest rates if incoming data suggest it is warranted. But he warned such a move wouldn’t turn around the euro bloc’s economic fortunes.

Mr. Weidmann praised the agreement between Cyprus and its international lenders for a €10 billion ($13.1 billion) bailout that includes steep losses for large depositors of Cypriot banks. Though the specific deal isn’t a blueprint for others, it shows the importance of having a “pecking order” for stakeholders of banks to bear the costs of their investment decisions, he said.”

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Read full Wall Street Journal article here

 
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