Bloomberg News

ECB’s Weidmann Warns Fiscal Compact Could Fall Short of Goal

January 24, 2012

Jan. 24 (Bloomberg) -- European Central Bank Governing Council member Jens Weidmann said there’s a danger that negotiations toward Europe’s fiscal compact may produce a deal that falls short of the original goal.

“Preliminary indications that have come out lead to the fear that the design of the rules will fall short of the goals and political declarations made,” Weidmann said in remarks prepared for an event in Eschborn, Germany today. “It’s decisive that there are strict and clear rules that can’t be sidestepped as they were in the past.”

European leaders are in the final stages of negotiating a deal that would see countries committed to a target structural deficit of no more than 0.5 percent of gross domestic product, as part of an overhaul of fiscal oversight in the region prompted by the sovereign debt crisis. German finance minister Wolfgang Schaeuble said today he’s “very confident” the deal will be completed by the beginning of next month.

“The goal of a structurally balanced budget should be given greater weighting, in that debt brakes should be anchored in national law,” Weidmann said. “It is necessary to bring self-responsibility, accountability and control back to fiscal policy, and maintain the disciplining function of financial markets.”

--Editors: Craig Stirling, Andrew Atkinson

To contact the reporter on this story: Jeff Black in Frankfurt at jblack25@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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