Monday

25th Jun 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).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

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.

Greece and creditors proclaim 'end of crisis'

After late-night talks, the Eurogroup agreed on a €15bn disbursement and debt relief measures for Greece, while setting out a tight monitoring when the bailout ends in August.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

News in Brief

  1. EP civil liberties committee votes for Article 7 on Hungary
  2. Report blames 2017 egg scare on lax EU enforcement
  3. Nine countries to sign up for Macron's military initiative
  4. Re-elected Erdogan potentially in power until 2028
  5. Macron's popularity drops among French pensioners
  6. Tajani calls for €6bn investment to halt migration
  7. Major demo in London for second EU referendum
  8. Venice Commission: Hungary should repeal NGO law

Stakeholders' Highlights

  1. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  2. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  3. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  4. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  5. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  6. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  7. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  8. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  9. Mission of China to the EUChina: Work Together for a Better Globalisation
  10. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  11. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  12. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform

Latest News

  1. Progressive CAP alternative only hope for sustainability
  2. Ponytailed green MEP joins 'the other side of the table'
  3. EU leaders still in search of migration plan
  4. Migration row at centre of EU summit This Week
  5. Merkel's woes cast shadow on EU's future
  6. Europe's tech race - trying to keep pace with US and China
  7. Merkel and Juncker's mini-summit risks fiasco
  8. Greece and creditors proclaim 'end of crisis'

Join EUobserver

Support quality EU news

Join us