Volker Wieland takes a critical view of new ECB instrument (FAZ)

The European Central Bank (ECB) wants to counter fragmentation in the euro area with a new instrument. In view of rising interest rates for the government bonds of highly indebted southern European countries, fears of a return of the euro crisis are growing. According to Prof. Volker Wieland, however, the argument of fragmentation is problematic. In principle, it is not the central bank's job to maintain the financing conditions of individual states or even to ensure a minimum price or maximum risk premium for individual bonds through targeted purchases, he said in an interview with the FAZ. "There may be borderline cases in a crisis. We had the example of OMT in the financial crisis."

At present, according to Wieland, we are not in such a crisis situation. It is more a question of inflation forcing a normalization of the interest rate level. But even highly indebted countries like Italy could bear the interest burden on their debts. "However, if Italy couldn't, a proven fiscal instrument at the European level, the ESM bailout fund, would already be waiting in the wings - you just have to want it."Moreover, if Italy, for example, applied for a credit line from the ESM, the ECB could implement bond purchases in the form of Outright Monetary Transactions (OMT) in the short term with legal backing. "So now it's just a matter of introducing new instruments with less demanding conditions," Wieland said, "I don't think that's a good idea."

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