German Lawmaker Calls for Trichet's Resignation
Following the ECB’s decision to start buying up assets to relieve liquidity problems within the euro zone, a leading German lawmaker has called for Jean-Claude Trichet to resign.
Frank Schaeffler, an economist for Germany's Federal Democratic Party, said Axel Weber, the head of Germany’s central bank should replace the former head of the French central bank.
In an interview with Germany’s Handelsblatt Monday, Schaeffler said the purchase of junk assets is the "guillotine" for the euro and such developments must be stopped.
Trichet appears far more worried about government spending and has been pushing hard for fiscal consolidation across Europe. In an interview with Der Spiegel over the weekend, the central banker said Europe needs "a quantum leap" in how it collectively manages public finances having previously refrained from demanding an overhaul of fiscal rules.
"There need to be major improvements (in fiscal coordination) to prevent bad behavior, to ensure effective implementation of the recommendations made by peers and real and effective sanctions in case of breaches,” he said.
This is a view backed by German Chancellor Angela Merkel, who is pushing for a tightening of the euro zone's fiscal rules.
German Finance Minister Wolfgang Schauble will push this week for euro members to attempt to all but balance their budgets over the medium term and is expected to unveil plans at a working group meeting on Friday.
It will be difficult for Trichet in his last 18 months as Weber pushes to replace him, but it is unlikely he will have to stand down before his official term ends in 2011, Mark O'Sullivan, a director at Currencies Direct in London, said.
Until the recent debt crisis, Trichet has been seen as a safe pair of hands whose actions during the banking crisis had, to a large extent, been ahead of his peers at the Federal Reserve d ECB. He has worked in the area of debt restructuring for many years following his work at the Paris Club where he oversaw a number of crises in Asia and Latin America.