Bundesbank's Weidmann Voices Concern Over Bailout Fund

        By Hans Bentzien and Monica Houston-Waesch
        FRANKFURT--Germany's central bank president Jens Weidmann said Thursday that it may be difficult for policymakers to discern whether a euro member faces temporary liquidity problems, or deeper insolvency risks, complicating the use of the region's bailout fund.
        The difference between a temporary lack of liquidity and insolvency is "difficult to judge," he said, in his first public remarks since Greece's government reached a deal with international creditors last week. Assistance to insolvent states would be difficult to reconcile with the Treaty's no-bail-out clause if debt relief becomes necessary and public institutions have replaced private investors, Mr. Weidmann noted.
        The Bundesbank has proposed that those states applying for European Stability Mechanism programs automatically receive a three-year debt extension, which would drastically reduce the amount of financing necessary. Financing could then be used for fiscal adjustment, rather than servicing payment on old debt, Mr. Weidmann said.
        Further, Mr. Weidmann urged that a leverage ratio between a bank's balance sheet and its own capital should be become obligatory for banks in 2018, as a first pillar of Basel capital requirements.
        Write to Monica Houston-Waesch at nikki.houston@wsj.com
        (END) Dow Jones Newswires

        July 23, 2015 12:07 ET (16:07 GMT)

#FX
#Forex
#SaleForex
#Bundesbank
#WeidmannVoices
#ConcernOver
#BailoutFund