Deutsche Bank's Chief Calls For An End to ECB's Cheap Money Era, Despite Strong Euro -- Update
September 06 2017 - 7:05AM
Dow Jones News
By Todd Buell
FRANKFURT--The head of Germany's largest bank said Wednesday the
European Central Bank should begin the process of ending its very
accommodative monetary policy, regardless of the strength of the
euro.
Speaking at a banking conference organized by German newspaper
Handelsblatt, John Cryan, Deutsche Bank's chief executive, said
that while cheap money has helped countries and banks escape the
crisis, it has also led to "ever greater upheavals."
He noted record real-estate prices in advanced economies. "The
stock market appears only to know one direction," he said, adding
"we are now seeing signs of bubbles in more and more parts of the
capital market, where we wouldn't have expected them."
The comments further highlight the discomfort among many in
Germany over the ECB's ultra-generous monetary policy, which
includes a negative rate on deposits that banks leave at the
central bank overnight.
"The era of cheap money in Europe should come to an end, despite
the strong euro," said Mr. Cryan. "I welcome the recent
announcement by the Federal Reserve and now also from the ECB that
they intend to gradually bring their loose monetary policy to an
end."
"The central banks must, however, plot a middle way that averts
massive losses on the markets," he said.
Speaking at the same conference, German Finance Minister
Wolfgang Schäuble said "every one hopes worldwide that we come to a
normalization as soon as possible. I believe that with the good,
stable economic development of the eurozone we are much closer to
this normalization than pessimists would have thought one year
ago."
The German minister, who in the past has sharply criticized ECB
policy, said, however, that he supported the central bank's
independence.
The comments come one day before the ECB is set to announce its
monetary policy decision. Economists said they expect the ECB to
announce how it intends to unwind its large-scale bond-buying
program. The ECB isn't expected to provide many details about the
end of quantitative easing at its meeting Thursday, but it may
provide signals it is preparing the exit from its asset-buying
program.
Mr. Cryan also gave Frankfurt an endorsement as the top location
to relocate after Brexit. He said that jobs would come to Dublin,
Amsterdam and Paris. But "in reality, none of these locations have
the structures in place to assume a large portion of the business
from London," he said.
"There is only one European city which can fulfill these
requirements and that is Frankfurt."
Mr. Schäuble also plugged for Frankfurt as the new home of the
European banking rule-setter the European Banking Authority, which
is currently in London, but will have to leave due to Brexit.
"It is entirely logical that [EBA] comes to Frankfurt. I know
other countries have applied for it, but I hope we can get it for
Frankfurt with better arguments," he said.
Hans Bentzien
contributed to this article
Write to Todd Buell at todd.buell@wsj.com
(END) Dow Jones Newswires
September 06, 2017 06:50 ET (10:50 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Deutsche Bank Aktiengese... (NYSE:DB)
Historical Stock Chart
From Apr 2024 to May 2024
Deutsche Bank Aktiengese... (NYSE:DB)
Historical Stock Chart
From May 2023 to May 2024