Jens Weidmann chooses, for now, the diplomatic line. In his speech at the European Banking Congress in Frankfurt, the president of the Bundesbank, a staunch opponent of quantitative easing, avoided the clash with the president of the ECB Mario Draghi who, speaking before him at the same congress, promised measures to ease inflation as soon as possible and called for an overall Eurozone fiscal policy that goes in the same direction as the ECB's expansionary monetary policy.
Weidmann, however, decided here not to enter directly into the ECB's choices by putting limits on Draghi's words and instead focused on the banking sector. In particular, he noted that Eurozone banks need to move towards higher capital requirements than those already foreseen by Basel 3. A recent study by monetary economists has highlighted that the most adequate capital ratio would be close to 11% against the 8% envisaged by Basel3.
While acknowledging the difficulties of credit institutions, Weidmann pointed out that the stagnant trend of loans in the Eurozone is also attributable to the weakness of the economy and the continuing need for deleveraging of banks, businesses and households. "To revitalize the growth of loans - she concluded - something more than favorable refinancing conditions is needed".
