Ifo President Hans-Werner Sinn criticises the European Central Bank’s move to take on the role of banking supervisor
Nov 4, 2014
Ifo President Hans-Werner Sinn has criticised the European Central Bank’s move to take on the role of banking supervisor.
“The Central Bank will face a serious conflict of interests if it is meant to supervise banks on the one hand, but seeks to buy relatively worthless securities from them on the other in order to ensure their survival. How this is supposed to be compatible with the ECB’s monetary policy mandate is a mystery,” said Sinn on Tuesday. “The result of the bank stress tests was a negative precursor to this latest move. The tame approach to the tests, and especially the lack of any review of the dangers of deflation, meant that the commercial banks only had to raise an additional ten billion euros in equity. It would have been better if another independent institution had been created to conduct the uniform banking supervision that is so urgently needed in Europe,” warned Sinn.
Prof. Dr. Dr. h.c. mult. Hans-Werner Sinn
Präsident a.D. des ifo Instituts