Weidmann says Greek funding decision belongs to governments, not central banks

[FRANKFURT] European Central Bank policymaker Jens Weidmann put the onus squarely on governments on Thursday to decide whether they wanted to cover Greece's funding needs, saying this was "less than ever" a task for the eurozone's central banks.

Reporting a fall in the German Bundesbank's 2014 profit due to reduced interest income, Mr Weidmann also said a rosy outlook for Germany's economy was no reason to turn a blind eye to risks such as geopolitical tensions and a demographic shift.

"Complacency in economic policy matters has no place in Germany," Mr Weidmann, whose role as Bundesbank president gives him a seat on the ECB's policymaking Governing Council, said in a statement accompanying the national central bank's 2014 results.

"The unfavourable demographic outlook will weigh heavily on the German economy in the medium term," Mr Weidmann said.

In the near term, the German economy should grow "somewhat" beyond its normal capacity utilisation level this year, and perhaps even more strongly in 2016, he added.

Turning to Greece, Mr Weidmann said governments and parliaments must decide whether they were willing to further increase their exposure to Greece and cover the Greek state's financing needs.

"This is less of a task for the Eurosystem (of eurozone central banks) than it has ever been," he said.

The Bundesbank's 2014 profit fell to 2.95 billion euros (S$4.35 billion), down from 4.59 billion a year earlier due to lower interest income. The full amount was transferred to the Finance Ministry in Berlin on Thursday.

Cuts in ECB interest rates in June and September 2014 meant the Bundesbank saw its 2015 annual result declining.


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