Sunday, June 10, 2012

Philip Aldrick — Bundesbank: the eurozone's secret dictator

What is certain is that the Bundesbank’s primary focus is Germany’s long-term stability, rather than any immediate eurozone solution. By being attune to the German national interest, the Bundesbank is playing the role of Merkel’s political guardian — fending off the siren voices of Europe’s weaker members who want direct transfer from German taxpayers.

But the Bundesbank’s dominance means that the eurozone crisis will not be resolved any time soon. In Weidmann’s words, the only real solution to the crisis is “structural reforms and budgetary discipline” among the periphery.
Long-term, Weidmann sees only two ways for the eurozone to evolve. It will either move towards a complete fiscal union, or revert to the original treaties — albeit strengthened “so they are conducive to stability”.

Spain has set its stall by the former, with Mariano Rajoy, its prime minister, calling for more integration, as has Merkel. ­Weidmann is said to believe that the latter is more realistic. For those hoping for a resolution and recovery, though, it’s not an inspiring option.
Read it at The Telegraph (UK)
Bundesbank: the eurozone's secret dictator
by By Philip Aldrick | Economics Editor
(h/t Yves Smith at Naked Capitalism)

Must-read to understand the EZ dynamic and Germany's role.
German Chancellor Angela Merkel may be the dominant force in the eurozone but the Bundesbank, Germany’s powerful central bank, is the power behind the throne.

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