German Finance Minister Wolfgang Schäuble has expressed his concern over the monetary policies of central banks around the world. He fears their 'generous' cash programs might raise inflationary pressures in economies.
Schäuble called on the world's main central bank chiefs to devise exit strategies from their "non-standard measures" in time to prevent recent massive cash injections from causing inflationary pressures.
Excess liquidity in the markets was a prime reason for the outbreak of the financial crisis in 2007/2008, the German Finance Minister told the Thai newspaper "The Nation" on Monday.
Speaking on the sidelines of the ASEM EU-Asian finance ministers' meeting currently being held in Bangkok, Schäuble said he trusted the monetary policy of the European Central Bank (ECB), despite a series of controversial measures recently.
In December 2011 and January 2012, the ECB pumped a total of 1 trillion euros ($1.29 trillion) into the European banking system to help shore up the balance sheets of ailing banks and to spur lending to businesses. In addition, Europe's central bank renewed a bond-buying program aimed at lowering borrowing costs of debt-stricken eurozone countries.
Similar measures were taken by the United States Federal Reserve Bank and the Bank of China.
Noting that the ECB was fully independent in its decisions, Schäuble said, however, that the central bank's primary mandate was to ensure price stability in the eurozone.
"I have no reason to assume the ECB will ever act outside of its mandate," Schäuble told the newspaper.
Schäuble's warning comes at a time when more and more central banks keep interest rates low and print money in efforts to boost sluggish economic growth. However, experts warn the cheap money is likely to create new asset bubbles and cause consumer prices to rise.
uhe/sej (Reuters, dpa)