One of the ECB’s policy makers Jens Weidmann said that the bond between state governments and their financial institutions ought to be broken with a banking merger. He was speaking to members of the press in Italy on Friday.
Weidmann also added that this is not something that can be solved immediately especially since it involves numerous legal changes some that are similar to those of financial merger.
Weidmann, who also serves as the chairman of Germany’s Bundesbank, noted that the agreed 100 billion euro bailout package was enough.
He also added that considering the current economic situation the bailout seems to have enough margin of safety.
Weidmann also noted that the failure of Greece to meet its debts would interrupt with the funding process.
Weidmann noted that such a situation would have serious consequences on the likelihood of remaining in the Euro.
Weidmann also commented on the current reforms being undertaken by Italy’s premiere Mario Monti saying that the prime minister had carried out significant reform measures.
He said that the only task that is remaining is to implement the reforms adding that the process might take long before it comes to fruition. Weidmann also noted that Italy looks promising.
When Weidmann was asked whether the ECB might lower interest rates below 1%, he said that the ECB would never commit itself before time.
He said monetary market unsteadiness came from political vagueness on implementing reform programs in Greece and on the fate of Euro zone in general.
He also noted that rate cut is not a solution to everything.