Sunday

22nd Apr 2018

Bundesbank chief: Eurozone crisis could last 10 years

  • Weidmann - 10 years needed to overcome the crisis (Photo: Chatham House)

Germany's central bank chief Jens Weidmann has said the eurozone crisis may take ten years to overcome, just as top euro officials claimed their response to the crisis is working.

"Overcoming the crisis and the crisis effects will remain a challenge over the next decade," Weidmann told Wall Street Journal in an interview published on Wednesday (17 April).

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

A member of the European Central Bank, Weidmann did not exclude a further interest rate cut "in response to new information."

The ECB key interest rate was lowered to a record 0.75 percent last year and has been kept at that level ever since. But while banks can borrow money from the ECB at such low interest rates, they have not lowered their own rates when lending to businesses or people.

"Everyone is asking what more can the central bank do instead of asking what other policy makers can contribute," Weidmann noted.

He urged European governments to continue reforms and warned that "the calm that we are currently seeing might be treacherous."

As for the Cyprus bailout, Weidmann said it was a good decision to include losses for depositors above €100,000.

"The Cypriot case shows that it's possible to wind down banks. This is in principle a good thing, because it means that taxpayers don't always have to step in to bail out banks," he said.

Meanwhile, other central bankers gathering in Washington for the International Monetary Fund's spring meeting also pointed to the limitations they have in helping economies overcome the crisis.

Mervyn King, the outgoing governor of the Bank of England, said that “there is the risk of appearing to promise too much or allowing too much to be expected of us," the Financial Times reports.

Top eurozone officials say that "Europe is responding" to the crisis and emerging stronger from it.

In a joint op-ed for the New York Times, Eurogroup chief Jeroen Dijsselbloem, economics commissioner Olli Rehn, ECB member Joerg Asmussen and the heads of the eurozone bailout fund and the European Investment bank, Klaus Regling and Werner Hoyer, admitted that the crisis revealed "structural problems" in the set-up of the economic and monetary union.

"But in the eye of the storm, we strengthened the foundations of our currency and improved the sustainability of our economies," they wrote.

The IMF takes a less optimistic view. On Tuesday it warned that the eurozone's economic recovery is falling behind that of the US and that swifter action by governments is needed to implement the so-called banking union.

But elections in Germany in September and the reluctance of other states to cede more powers to Brussels is stalling the process.

IMF warns Europe of falling behind US on recovery

Europe is falling behind the US in emerging from the economic crisis, with sluggish growth in Germany and recession in France worsening the outlook for eurozone periphery countries, the IMF has said.

Macron and Merkel pledge euro reform

France and Germany have pledged to forge a joint position on euro reform by June, despite German reluctance on deeper monetary union.

News in Brief

  1. Audit office: Brexit 'divorce' bill could be billions higher
  2. MEPs urge better protection for journalists
  3. Dieselgate: MEPs back greater role for EU in car approvals
  4. European parliament adopts new organic farming rules
  5. EU granted protection to half million people in 2017
  6. Report: Facebook to carve 1.5bn users out of EU privacy law
  7. Greek court ruling permits migrants to travel to mainland
  8. Commonwealth summit hopes for trade boost after Brexit

Stakeholders' Highlights

  1. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  2. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  3. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  4. Martens CentreJoin Us at NET@WORK2018 Featuring Debates on Migration, Foreign Policy, Populism & Disinformation
  5. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  6. UNICEFCalls for the Protection of Children in the Gaza Strip
  7. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  8. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight
  9. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  10. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  11. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  12. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia

Latest News

  1. ECJ ruling set to end 10-year 'mouth tobacco' lobbying saga
  2. Whistleblowers, Syria and digital revolution This WEEK
  3. MEP friendship groups offer 'backdoor' for pariah regimes
  4. Macron and Merkel pledge euro reform
  5. Obscurity surrounds EU military fund's expert groups
  6. New EU party finance rules short circuit accountability
  7. Draghi to stay in secretive 'lobby' group
  8. Bulgaria offers lesson in tackling radical-right populists