The chief of Germany's powerful central bank may step down. German newspaper Bild reports that German Bundesbank President Jens Weidmann will resign. The reason given is his battle with ECB President Mario Draghi over whether the European Central Bank should buy the bonds of the European Union's financially weakest nations to bring down the interest rates they pay on their sovereign paper. Weidmann believes the ECB would be overstepping its mandate.
However, German resistance to the plan could still prevail because of its huge contributions to any and all bailout programs for the region. Weidmann and other German financial leaders may well be able to block ECB action, which has been supported vocally by leaders from France and Italy. Germany, for the most part, still favors strict austerity as the best solution to budget problems in the region. Lower interest rates, brought down by any future ECB programs, only lets these nations off the hook, as Weidmann sees it.
Douglas A. McIntyre
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