Tuesday, October 19, 2010

Die neue deutschemark? (or is it das neue deutchehmark?)

ECB board member Axel Weber has publicly criticized the ECB’s policy of buying the bonds of weak governments without strict conditionality. The reason he gives is that having the central bank finance governments “risks blurring the different responsibilities between fiscal and monetary policy”.

Fair enough. He want the EU to bailout Greece, not the ECB. But I’ll bet you that he doesn’t want the EU to bail out Greece either. My guess is that he wants his deutschemark back, and I think he isn’t alone in that desire.

So far only the German media has called for restoring the DM, but I’m confident that we will start hearing from politicians as well.

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