Central Banks Alone Can't Fix Europe: Weidmann

Written by Katy Barnato, reported by Julia Chatterley
Tuesday, 12 Mar 2013 | 8:51 AM ET
Only Politics Can Solve the Crisis: ECB's Weidmann
Tuesday, 12 Mar 2013 | 8:30 AM ET
Jens Weidmann, president of the Bundesbank and a member of the ECB's governing council, says only politics, not the European Central Bank, can solve the euro zone crisis.

Politicians must act to combat Europe's financial crisis because central banks can't do it alone, Jens Weidmann, the president of the Bundesbank, Germany's central bank, said Tuesday.

"We face a structural crisis in Europe. We face a crisis of confidence, and this can only be overcome if politicians really tackle the root causes," Weidmann told CNBC in an interview.

"Monetary policy can only buy time at best. ... In that sense, I am a bit concerned about some of the expectations around the power and potential of monetary policy actions."

Weidmann said central bank actions had blurred the line between monetary and fiscal policy during the crisis.

"We should quickly revert to our core business, which is monetary policy," he said.

He added that he was skeptical about the prospect of further stimulus measures helping small and medium-size enterprises, particularly in Europe's peripheral nations.

On a separate note, Weidmann described France as the "test case" for Europe's new budgetary rules.

"I don't think France is a crisis country. … France is now the test case for the new budgetary rules, the strengthened Stability and Growth Pact, and our hope is that the pact is applied in a very strict manner," he said.

(Read More: Bundesbank Tells France to Stick to Budget)

Weaker-than-expected growth has forced France's socialist President Francois Hollande to relinquish his original deficit target for 2013.


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