- Jens Weidmann, Bundesbank President
The ECB Governing Council member Jens Weidmann believes that loose monetary policy had "done its bit" to keep price stability in the Euro bloc, but cited a list of long-term dangers from easy money. Weidmann said that it was of paramount importance to prevent an excessively long period of low inflation as that "could paralyze the euro area's economy." However, he added that the ECB's monetary policy could not resolve the Euro zone debt crisis. His comments came in contrast to the International Monetary Fund Director Christine Lagarde's calls, who urged the European Central Bank to pursue an accommodative monetary policy and warned that markets may be too positive about the European recovery. Lagarde said that surveys are indicating a rebound in Europe and markets have risen sharply, but the economic recovery remains "fragile, quite modest and imbalanced" in the Euro zone. She said the ECB must continue with an accommodative policy as inflation is "largely below" the price stability target of near 2% and that undermines economic expansion and increases debt burdens.
In the meantime, Cyprus wants to start talks with the ECB on a debt swap that would ease the burden on the country's largest lender. In a meeting with ECB President Mario Draghi , Cypriot President Nikos Anastasiades raised the possibility of converting emergency loans granted to the Bank of Cyprus at the height of the nation's financial crisis into longer-term debt.
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