FRANKFURT (Reuters) - The euro zone has not yet been made crisis proof, so the European Central Bank is still at risk of having to function as a crisis-response unit, a risk to its independence, Bundesbank President Jens Weidmann said on Tuesday.
“Certain issues like the lack of credibility of fiscal rules or the harmful sovereign-bank nexus still have to be adequately addressed,” Weidmann said in a speech in Pretoria, which did not discuss current monetary policy.
He argued that fighting crises forces unelected central bankers to take political decision, which are difficult to square with democratic principles and may go beyond banks’ narrowly defined mandate.
“Acting beyond the mandate would also undermine people’s trust in the central bank,” Weidmann said. “At the end of the day, it could become more and more difficult for the European Central Bank to focus on its promise of a stable currency.”
Reporting by Balazs Koranyi, editing by Larry King