The global economy faces a financial bubble from central banks pumping cash into economies, Germany’s finance minister has warned, BBC reports. “We should take on board the lessons of the last crisis,” said Wolfgang Schaeuble in his Budget speech. He added that economic reforms should not be neglected in favour of action from central banks.
The comments come after the European Central Bank (ECB) said it would extend its stimulus programme if needed. The ECB launched its €1.1 trillion bond-buying scheme – a form of monetary policy or quantitative easing – in January to support the eurozone economic recovery, which the bank’s president, Mario Draghi, said could be extended beyond 2016 if needed.
Mr Schaeuble has repeatedly warned against an over-reliance on central bank stimulus to prop up economies. He stressed the need for structural reforms stating: “When we call for structural reforms in return for financial assistance, this isn’t some narrow-minded mantra being repeated by people who have lost sight of the big strategic questions of the future.
“In fact, this may well be the most important long-term strategic question we face today.”