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Weidmann warns of currency war risk
Posted By admin On January 22, 2013 @ 6:33 am In Money Watch | Comments Disabled
Financial Times 
Jan 22, 2013
The erosion of central bank independence around the world threatens to unleash a round of competitive exchange rate devaluations, which leading economies have so far avoided during the financial crisis, the president of Germany’s Bundesbank warned on Monday.
Jens Weidmann, whose institution’s own fierce independence from political influence was the model for the European Central Bank when it was founded, said Stephen King, the chief economist at HSBC, was “perhaps right” in forecasting an end to the era of central bank independence .
“It is already possible to observe alarming infringements, for example in Hungary  or in Japan , where the new government is massively involving itself in the affairs of the central bank, is emphatically demanding an even more aggressive monetary policy and is threatening an end to central bank autonomy,” Mr Weidmann said in a speech in Frankfurt.
“Whether intended or not, one consequence could be the increased politicisation of the exchange rate,” he said, according to a text of his speech provided by the Bundesbank. “Until now the international monetary system got through the crisis without competitive devaluations and I hope very much it stays that way.”
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URLs in this post:
 Financial Times: http://www.ft.com/cms/s/0/d1d81962-63e7-11e2-b92c-00144feab49a.html#axzz2IhegIdev
 end to the era of central bank independence: http://www.ft.com/cms/s/0/a4e41f16-5b1b-11e2-8ccc-00144feab49a.html
 Hungary: http://www.ft.com/cms/s/0/de4f7c0e-8d6d-11e1-b8b2-00144feab49a.html
 Japan: http://www.ft.com/cms/s/0/6395f758-4ce5-11e2-a99b-00144feab49a.html
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