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'Cheap money shouldn't stop reform zeal' in euro zone - Schaeuble

Published 27/12/2014, 01:33
© Reuters. German Finance Minister Schaueble addresses Bundestag in Berlin

BERLIN (Reuters) - German Finance Minister Wolfgang Schaeuble expressed his reservations against the European Central Bank launching a bond buying stimulus programme and praised Bundesbank president Jens Weidmann's arguments against such moves.

In an interview with Bild newspaper on Saturday, Schaeuble repeated his view that structural reforms are needed in some of the struggling euro zone countries.

"The ECB can make its decisions independently," Schaeuble said. "But cheap money should not be allowed to dent the reform zeal in some countries. There is no alternative to structural reforms - if things are going to improve again."

ECB President Mario Draghi has thrown the door open for further measures to bolster the euro zone. Draghi has said the ECB would decide early next year whether to take fresh action to revive the region's economy, adding that the bank's Governing Council would not need to be unanimous to begin sovereign bond buying.

The ECB has set itself a goal of expanding its balance sheet by buying assets from banks and others in return for cash it hopes will be pushed into the economy -- by up to 800 billion or even 1.0 trillion euros (1 trillion pounds). A policy of quantitative easing carried out by buying sovereign bonds would help it achieve that target.

Weidmann has cautioned the ECB about the legal hurdles it would face in printing money to buy government bonds, underlining his opposition to such a move, laying bare entrenched German opposition to such a policy.

Such quantitative easing, although used in the United States and Japan, might not work in Europe, Weidmann said.

Schaeuble, when asked whether Weidmann has enough clout in the ECB, said: "Germany's voice has weight...But even if we're the strongest economy, Germany can't always get its way. At the end of the day a compromise is what's needed. But the arguments from Jens Weidmann are strong and are listened to in the ECB."

He added Chancellor Angela Merkel and he have an open dialogue with Draghi.

© Reuters. German Finance Minister Schaueble addresses Bundestag in Berlin

"The Chancellor and me, the finance minister, are constantly having intensive discussions with Mario Draghi."

(Reporting By Erik Kirschbaum; Editing by Christian Plumb)

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