European Central Bank Governing Council member Jens Weidmann warned against starting a discussion about handing out cash to stimulate growth, Funke Mediengruppe reported, citing an interview.
“Helicopter money isn’t manna falling from heaven, but would rip huge holes in central bank balance sheets,” Weidmann, who heads Germany’s Bundesbank, said, according to the newspaper. “The euro area states and taxpayers would pay the bill in the end.”
ECB President Mario Draghi expanded the central bank’s bond purchases and offer of cheap loans to banks this month to help stoke inflation. While monetary conservatives, including those at the Bundesbank, have warned against such steps, other ECB policy makers suggest they could go further.
“Instead of suggesting ever more reckless monetary policy experiments, it would make sense to pause,” Weidmann was cited as saying in German. “Monetary policy is not a panacea, doesn’t replace the necessary reforms in individual countries and won’t solve all of Europe’s growth problems.”
Weidmann was also cited as saying he was not convinced on the whole by the measures the ECB announced this month. “I’ve always said the effect of ultra loose monetary policy gets weaker the longer it lasts. At the same time, the more you put your foot on the gas, the bigger the risks and side effects become,” Weidmann said.
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Separately, Weidmann said he doesn’t think that eliminating the 500 euro note would “noticeably” reduce criminal activity. Such a move would also present a logistical challenge, he said, according to Funke.
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