The European Central Bank must resist calls to widen its mission of
defending price stability, even against the backdrop of the escalating
debt crisis ravaging the currency zone, European Central Bank
Governing Council member Jens Weidmann argued Thursday.
Letting inflation rise would not solve the continent's problems, said
Weidmann, who also serves as president of the Deutsche Bundesbank,
according to the text of a speech prepared for an event in Mannheim,
Germany.
"Monetary policy's obligation to its primary goal of price stability
is a historical achievement and there should not be any concessions to
this," Weidmann said. "Instead monetary policy should counter emerging
upward risks to inflation with determination."
Weidmann said price stability remains the best contribution that
monetary policy can make toward financial stability and cautioned
against expecting that more fiscal integration would solve problems
like high unemployment or lack of competitiveness.
The Bundesbank head also took a rare public swipe at another euro zone
state, saying the different cultures in the euro zone would also be
challenge to a fiscal union. He eyed France, where President Francois
Hollande recently moved to lower the retirement age from 62 to 60 for
some workers.
"Let's not be under any illusions: there are big differences here even
between Germany and France. Public spending is 46% of GDP in Germany,
and 56% in France," Weidmann said.
"While Germany is reacting to demographic challenges with a gradual
increase in the retirement age to 67, in France, a recently enacted
increase from 60 to 62 years is now due to be partially reversed," he
said.
Geoffrey T. Smith in London contributed to this article
Write to Tom Fairless at: tom.fairless@dowjones.com
Write to Todd Buell at: todd.buell@dowjones.com
(END) Dow Jones Newswires
June 14, 2012 10:35 ET (14:35 GMT)
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