European Central Bank Governing Council member Klaas Knot said Germany should support raising the European emergency fund to help end the region’s debt crisis.
“The most important obstacle lies in Germany, not in the Netherlands,” Knot said in an interview on Dutch public television last night. “I think that more money is needed and we will use the time to convince our German colleagues.”
German Chancellor Angela Merkel has resisted calls to ratchet up bailout funding amid warnings that the current amount isn’t enough to safeguard nations such as Italy and Spain. Germany has instead focused on budget discipline as the best means to stem the crisis now in its third year.
“We haven’t moved in the right direction and it’s also clear that measures needed are happening too slowly and too limited in size,” said Knot, who in July succeeded Nout Wellink at the Dutch central bank. “A significant acceleration in decision-making is needed.”
German lawmakers will probably resist increasing funds for European bailouts to ease the debt crisis, two allies of Merkel said yesterday, signaling opposition to a bigger firewall. The 500 billion-euro ($640 billion) ceiling for the permanent European Stability Mechanism is scheduled to go into effect this year.
Separately, Knot said he isn’t worried about the depreciation of the euro against the U.S. dollar. “It’s part of the normal exchange rate fluctuation, even in historic perspective the euro is remarkably stable even compared to other currencies.”