BERLIN, July 20 The head of Germany's Sparkassen
savings banks association fears that the European Central Bank's
expansive monetary policy stance could create price bubbles, he
told a German paper, without specifying which markets were
causing him concern.
"Because so much money is coming from all angles, we are
once again seeing that irresponsible risks are being taken,"
Georg Fahrenschon was quoted as saying in an interview with Welt
In Germany, traditionally a nation of savers, the decision
by the ECB to push interest rates to record lows in June has led
to fears that cheap credit could fuel real estate and stock
market bubbles. The media has seized on rising house prices as
evidence of this.
"Risks are being incorrectly priced, and the danger is
growing that bubbles will be created and then pop," Fahrenschon
Bundesbank chief Jens Weidmann said last week that the ECB
should tighten policy as soon as it can.
Fahrenschon also said that Europe should take a more
U.S.-style approach to bank supervision. "Instead of subjecting
every cooperative and savings bank to European rules, we should
just concentrate on the large and risky institutes," he said.
(Reporting by Victoria Bryan; editing by Jane Baird)