(BN) Weidmann Says Loan to IMF Needs Non-Euro Nations to Join In
How can they host a summit, make a plan, and not have the biggest central bank on board? I’m not winning any awards for planning and organization, but this seems silly. They had a summit. One of the key elements of that was some new way for IMF to funnel money to Europe, and here, the biggest central bank, the one with the best reputation, the one that is critical, is basically saying Nein?
How are they going to get 17 members to agree to treaty changes and to oversight from other countries, when the biggest, allegedly most organized country can’t pull it together?
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Weidmann Says Loan to IMF Needs Non-Euro Nations to Join in (1)
2011-12-14 13:18:01.251 GMT
(Adds summit statement in third and seventh paragraphs. See
EXT4 for more on Europe’s debt crisis.)
By Jeff Black
Dec. 14 (Bloomberg) — Germany’s Bundesbank can provide as
much as 45 billion euros ($59 billion) for a loan to the
International Monetary Fund only if nations outside the euro
area also contribute, President Jens Weidmann said.
“The Bundesbank has stated its readiness to provide up to
45 billion euros as long as there is a fair distribution of the
burden amongst the IMF members,” Weidmann said at an event in
Frankfurt last night. His comments were embargoed until noon
today. “If these conditions are not fulfilled, then we can’t
agree to a loan to the IMF.”
The comments suggest a stronger stance from the Bundesbank
on the need for outside help than European leaders indicated at
a summit earlier this month, when they merely invited “parallel
contributions” from other nations. The Dec. 9 summit agreed on
additional resources of 200 billion euros for the IMF from the
euro area and other European Union members. The U.S. has said it
won’t participate.
“There has to be a fair distribution of the burden,”
Weidmann said. “If large members, for example the U.S.A., were
to say ‘we’re not taking part,’ then from our point of view it
is problematic.”
Weidmann said the funds must also go into the IMF’s general
resources and not a special fund for Europe.
“In no circumstances can a circumvention of the
prohibition on monetary state financing take place,” he said.
“It cannot be the intention that euro-area central banks
finance euro-area governments. We are not talking about a loan
here for the euro area.”
‘Parallel Contributions’
The summit agreement called for EU members to “consider
and confirm” by Dec. 19 the additional funds “to ensure that
the IMF has adequate resources to deal with the crisis.”
“We are looking forward to parallel contributions from the
international community,” the leaders said in their statement
agreed in Brussels.
Prime Minister David Cameron’s spokesman said the U.K. did
not agree to increase its contribution to the IMF at the summit.
“This report is untrue,” Steve Field told journalists in
London after The Daily Telegraph reported today that the U.K.’s
contribution might rise by 30 billion pounds ($46 billion).
Turning to monetary policy, Weidmann said he assumes euro-
area inflation will drop below 2 percent next year and that the
ECB has “sufficient instruments to react.”
For Related News and Information:
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–Editors: Matthew Brockett, Eddie Buckle
To contact the reporter on this story:
Jeff Black in Frankfurt at +49-69-92041-205 or
jblack25@bloomberg.net
To contact the editor responsible for this story:
Craig Stirling at +44-20-7673-2841 or
cstirling1@bloomberg.net