The Bundesbank President Jens Weidmann has expressed doubts about the effectiveness of the asset purchase program (Quantitative leasing or “QE”) announced Thursday by the European Central Bank (ECB) to boost economic activity in Europe. In an interview with Welt am Sonntag, Jens Weidamnn part of the Governing Council of the ECB has also said he had voted against the program.
Smaller effects and the United States
He believes that the weak growth in the European Union is first linked to the high level of debt and the lack of competitiveness of some member countries. “ It is up to governments to fix this ,” said he said.
“It is difficult to estimate the effects this could have but are likely to be less than those known in the United States , “he said referring to the measures taken by the Federal Reserve after the financial crisis of 2008.
” The level of interest rates were much higher in the United States where it started. In addition, US companies frequently use markets for financing and procurement of central bank have made a more direct impact at home and in an economy (wider) financed by banks . “
The temporary low rates
Jens Weidmann had already expressed skepticism Saturday in the daily newspaper of wide circulation Bild, arguing that the program would reduce the pressure weighing on France and Italy to conduct reforms. According to him, the program of the ECB, called “ Instrument abnormal monetary policy” , is not a “turning point” but it remains “ a serious decision” . The decision of the European Central Bank has, in his eyes, “ disadvantages and risks ” to the single currency.
“ The rate Inflation is, of course, very low at the moment but this downward trend is related to the weakness in oil prices , “he says. “ many signs that the extremely low rate of inflation is only temporary .”
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