[ad_1]
Jens Weidmann, Chairman of the Bundesbank, saw that the time had come to make it clear that the government and central bank subsidies introduced as a result of the corona virus crisis should be withdrawn as soon as possible. For example, the employment of German workers with hidden public money that their company may have had to close a long time ago.
Jens Weidmann, president of the Bundesbank and, as a result of this position, a member of the Monetary Council of the European Central Bank, is concerned that the massive financial support introduced by European governments in response to the corona virus crisis is addictive. wheel, wrote the Financial Times. The banker also has a low opinion of the EU’s € 750 billion recovery fund, saying it creates a kind of debt illusion when the EU requests a loan, which is therefore not reflected in the states’ public debt. members.
According to the British economic daily, this opened the debate on the reorganization of economic stimulus measures by governments and central banks. Weidmann does not dispute that the crown crisis required monetary easing or budget spending, but there could be a serious debate about how governments are withdrawing their measures because individual countries are not recovering from the crisis at the same rate. Germany, for example, is faster than Spain.
The main shell
It is well known about the German banker that he is one of the most fictitious members of the ECB’s leadership, that is, he is strongly committed to a disciplined monetary policy. He is no longer refined in his view that it was important for support measures to be comprehensive and to be implemented quickly in response to the crisis, but the way out must be found with similar effectiveness. Fiscal policy and interest rate cuts must not be maintained, the public debt / GDP ratio must decrease before the crisis dies down!
Before Weidmann’s speech, the German government had just expanded its economic stimulus program, such as the famous Kurzarbeit method, in which company employees could receive two-thirds of their salaries from the central budget, and extended it until the end of the year . The French and Spanish governments have made similar decisions. Meanwhile, they continue to help businesses with cheap loans and keep troubled businesses from filing for bankruptcy.
Back to the market
Reflecting on this in part, Weidmann spoke of the benefits of programs like sending workers on compulsory leave, but this shouldn’t persist in the long run. This may mean that the workforce is tied to companies that have no future and that economic structures that have become superfluous are fixed. He also warned politicians to refrain from having a say in corporate decision-making, such as decisions about new investments.
The Bundesbank’s first man has always criticized the ECB’s bond-buying program, in which the European central bank buys government bonds from eurozone member states to keep the government’s borrowing costs low. In this sense, he pointed out that if monetary easing continues for a long time, governments will lose incentives to reduce the debt of their states. Therefore, it should be clarified that this type of monetary policy is temporary, and if inflation increases, they will return to the traditional system in which the main task of central banks is to control the deterioration of money.
[ad_2]
