FRANKFURT, April 7 The European Central Bank
should consider spinning off its new supervisory arm into a
separate institution, Bundesbank Chief Jens Weidmann said,
adding that overburdening monetary policy is "anathema to the
The Single Supervisory Mechanism (SSM), run out of the ECB,
is due to take over supervision of euro zone banks in November
after conducting a health check of the sector.
Weidmann supported a suggestion made by Klaas Knot, the
Dutch national central bank chief, to make use of the ECB's
credibility to establish the SSM before later looking to
establish it as a separate institution.
"I can only agree with his view," Weidmann said in the text
of a speech for delivery at the Duitsland Instituut in Amsterdam
Weidmann argued that to strengthen the stability of Europe's
monetary union, stiffened fiscal rules should be applied more
consistently and "preferential" treatment accorded to sovereign
debt - treated by European regulators as risk-free - should be
"Overcoming the crisis is still an uphill struggle; if you
don't go forwards, you go backwards," he added.
"With regard to reforms, governments therefore have to keep
the pedal to the metal. In footballing terms, I would say 'the
half-time whistle has blown'. However, there is no time for a
Weidmann made no mention in his speech of quantitative
easing (QE), a policy option he floated late last month as a
possibility for the ECB. However, he stressed that the ECB
should not be overburdened.
"Overburdening monetary policy is of course anathema to the
Bundesbank," Weidmann said.
(Writing by Paul Carrel)