Italy's economy minister expects the European Central Bank to print money to buy government bonds to ward off the risk of deflation, he said in an interview published on Saturday. The measure, known as quantitative easing, has split opinion within the ECB and among euro zone finance ministers. Supporters say it would help to revive the region's struggling economy and opponents say it would encourage spendthrift states to borrow more.
"I think we will arrive at a (programme of) quantitative easing. It is necessary to avoid the risk, which is very high today, of falling into the dangerous trap of deflation," Economy Minister Pier Carlo Padoan said in an interview with Italian newspaper La Stampa. The interview was published on the same day that Jens Weidmann, head of Germany's central bank, warned against comparing the effects of quantitative easing in the United States and Japan with its possible effect in the euro zone.
Weidmann said in an interview published in Italian newspaper La Repubblica and several other European papers that having common monetary policy but different financial policy and debt levels tempted countries to run up more debt and "dump the consequences on others." Padoan, who said on December 5 that Europe should move towards quantitative easing, said in Saturday's interview the measure would be "less effective" in Europe than in the United States, which he said had a real single market.
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