Germany's Merkel Supports ECB Bond Buys to Stabiliza Euro Lawmaker
BERLIN--German Chancellor Angela Merkel told members of her party Wednesday she supports the European Central Bank's bond purchases if they fall within its mandate of stabilizing the euro rather than being done to finance sovereign debt, according to a senior lawmaker.
"Monetary policy and fiscal policy are two different issues; those have to be separated," Ms. Merkel told parliamentarians, Norbert Barthle --the budget expert of the ruling conservative alliance of Christian Democratic Union and Christian Social Union --told Dow Jones Newswires after the meeting.
"Of course she is with Draghi when he says that he stabilizes the value of the euro; that is all right if it happens within his mandate," Mr. Barthle said, referring to Mario Draghi , the president of the European Central Bank . She worried, however, this might be misunderstood, he said.
She reiterated her support for Bundesbank President Jens Weidmann , particularly in his struggle to separate the monetary policy and fiscal policy of euro-zone member countries, Mr. Barthle said.
Mr. Weidmann follows principles she supports, Ms. Merkel told parliamentarians. But she also supports the ECB president, as long as the ECB operates within its mandate to stabilize the euro, Ms. Merkel said during the afternoon meeting, Mr. Barthle said.
Ms. Merkel met the parliamentary group at the Reichstag, the parliament building, to discuss a variety of issues after parliamentarians returned from vacation.
She told the members of parliament she understands the pickle Spain is in--the country is undertaking a fiscal overhaul, but the changes take time to become effective. In the meantime, political pressure on the country is building. This dynamic creates a very complex situation, she told members.
She didn't discuss potential sovereign-debt purchases by the ECB to ease financial pressure of troubled European countries, Mr. Barthle and other people familiar with what she said told Dow Jones, and didn't go into any details about the magnitude of bond purchases to support the currency. But such purchases could be extensive, if the situation mandates such action to support the euro, Mr. Barthle said.
Bond purchases of troubled countries have been a hot issue among German politicians. Mr. Weidmann, a ECB council member, has been critical of extensive sovereign-bond purchases, and Mr. Draghi has said the ECB would do whatever it takes to preserve the euro, while there are fears Greece could fail to get its fiscal house in order and would then have to leave the euro zone.
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matthias.rieker@dowjones.com
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(END) Dow Jones Newswires
09-05-12 1340ET
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