Monday, December 19, 2011

Europe - Dec 19, 2011

German Chancellor Angela Merkel and Bundesbank President Jens Weidmann urged Europe to stick to stricter budget discipline and forget about one shot solutions after financial markets judged that another EU summit had failed to resolve the Eurozone’s debt crisis. Speaking separately, they rebuffed pressure for the European Central Bank to intervene decisively to stop the crisis escalating. Merkel told the German parliament on Wednesday it would take years, not weeks, to overcome the debt problems but Europe would emerge stronger. Weidmann made clear his opposition to ramping up purchases of troubled Eurozone states' debt, saying he was "no fan" of the existing limited bond buying program. He also said the Bundesbank would only provide fresh funds for the International Monetary Fund to help fight the crisis if countries beyond Europe do so too. Weidmann told journalists the ECB's mandate prevented it from embarking on unlimited bond purchases and that experience showed this would inevitably lead to inflation anyway.

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