Germany prepares for Financial crisis: Schaeuble criticizes ECB


Germany prepares for Financial crisis with its Finance Minister criticising the ‘ultra-loose’ monetary policy of the ECB and warning against a possibility for another crisis. What are his arguments? 

10 October, AtoZForex – Wolfgang Schaeuble, German Finance Minister, alerted that a new financial crisis could not be excluded, agreeing with the International Monetary Fund’s (IMF) evaluations of banking system risks from “ultra-loose” monetary policy.

Germany prepares for Financial crisis

During the conference related to the Germany’s leadership of the G20 meeting in 2017, German Finance Minister criticized the ‘ultra-loose’ monetary policy performed by the European Central Bank (ECB). The ‘ultra-loose’ monetary policy includes negative rates and other unconventional approaches applied by the ECB to boost Europe’s economy. Wolfgang Schaeuble said that more officials are now expressing concerns in regards to this issue. As the risks of ultra-loose monetary policy may outweigh its chances of success. According to Mr. Schaeuble, the threat of new crisis hasn’t fully disappeared.

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“If the IMF itself is warning against the consequences of ultra-loose monetary policy, I think it’s a sign of hope that we will take more seriously what the Bank for International Settlements is saying again, again and again.

That two things together – the global overhang of indebtedness, private, public and company, together with an ultra-loose monetary policy – maybe is one of the risks we will have to tackle even since we have drawn all the lessons of the financial crisis 10 years ago.”

IMF comments in regards to Deutsche Bank

Referring to Deutsche Bank, Wolfgang Schaeuble refused to give any comments in regards to the conditions of the bank which is currently encountering challenges due to the $14 billion fine proposed by the US Department of Justice over mis-selling of mortgage-backed securities.

At the IMF’s semi-annual meetings in Washington, the fund commented that Deutsche Bank should review its business model in order to generate profit during the anticipated period of low-interest rates. In response to the IMF’s statement,Wolfgang Schaeuble said that it was not the responsibility of the fund nor of other international institutions to monitor European banks.

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