Bundesbank head threatens to resign in fight with ECB

PanARMENIAN.Net - The head of the German central bank or Bundesbank has threatened to resign in the festering fight with the European Central Bank over its anti-crisis measures, the daily Bild reported, according to AFP.

The newspaper, quoting financial sources, said Bundesbank chief Jens Weidmann has repeatedly threatened to quit in protest over ECB chief Mario Draghi's plans to restart a contested bond-buying program to help the eurozone's most debt-wracked countries.

The German government has pressed Weidmann to remain, however, and the Bundesbank chief -- who like each of the other 16 eurozone central bank chiefs has only one vote at the ECB's monthly policy setting meetings - has agreed to stay on at least for the time being and fight his corner at next week's meeting.

For the moment, he believes that is the way to fight for the stability of the euro and the independence of the ECB, the newspaper said.

Weidmann argues that the bond-buying program, which has worked in the past at bringing down the borrowing costs of crisis-hit countries, is tantamount to monetary financing, where the central bank prints money to pay off a country's debt. And that is something which is expressly forbidden under the ECB's statutes.

He fears the measures will fuel inflation, ease the pressure on over-spending governments to get their finances in order and erode the independence of the ECB.

Weidmann's predecessor Axel Weber already quit in protest over the program, as did the ECB's former chief economist Juergen Stark, also a German.

Weidmann has never made any secret of his opposition.

But Draghi issued a public plea for the German central banker to drop his resistance in a newspaper article earlier this week, saying the program and other special emergency measures were justified by the current exceptional circumstances, AFP reports.