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ECONOMIC CRISIS

Schäuble to ban naked short selling

Finance Minister Wolfgang Schäuble intends to ban short selling without first borrowing security, in a bid to rein in stock market speculation.

Published: 7 March 2010 13:39 CET
Schäuble to ban naked short selling
Photo: DPA

“In order to counter the risks that short selling presents to the stability of the financial market, naked short selling will be outlawed in the future,” Schäuble told the Frankfurter Allgemeine Sonntagszeitung.

“This is an important and necessary extension of our attempts to regulate the financial market,” he said. Naked short selling is when stock market traders sell financial instruments which they neither own or have borrowed security to cover.

The new proposal was sparked by recent stock market speculations on Greece going bankrupt. “These speculations were poison. Gamblers should not be allowed to speculate against states,” said the financial policy spokesman for the ruling Christian Democratic Union Leo Dautzenberg.

Dautzenberg also presented the government’s intention to create a central supervisory body for controversial trading in continental Europe.

The CDU’s coalition partners the Free Democratic Party supported the measure. “We need a common European course of action against speculators who are making the crisis worse, said Silvana Koch-Mehrin, head of the FDP in the European parliament.

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ECB

Germany calls on ECB to unwind economic stimulus

The European Central Bank should begin winding down its expansive monetary policy in 2017 as inflation returns in the eurozone, German Finance Minister Wolfgang Schäuble said in an interview on Friday.

Published: 14 January 2017 08:16 CET
Germany calls on ECB to unwind economic stimulus
Wolfgang Schäuble has long grumbled about the ECB's policies. Photo: Kay Nietfeld/dpa
“It would probably be right if the ECB starts daring to head for the exit this year,” Schäuble told the Sueddeutsche Zeitung newspaper — although he acknowledged it would be a “difficult task”.
 
The ECB has fixed interest rates at record lows in the 19-nation single currency area, as well as offering cheap loans to banks and buying up tens of billions of euros per month of government and corporate debt.
   
The moves are designed to make more cash from the financial system available to the real economy, powering growth and investment and driving inflation towards its target of just below 2.0 percent.
   
German economists and political leaders have long grumbled about the policy, objecting that low interest rates hurt savers.    
 
With interest rates on many savings accounts lower than inflation, Germans' cash piles will shrink in real terms if prices continue to grow and rates remain unchanged.
   
“I share the concerns” of savers, Schäuble told the SZ on Friday, noting that inflation is expected to rise further in 2017.
   
In Germany, prices increased faster in December than in the rest of the eurozone, at 1.7 percent compared to an average of 1.1.
   
There is “ongoing evidence of German inflation picking up markedly,” IHS Markit economist Howard Archer tweeted Friday, warning that the rise would “fuel tensions with the ECB”.
   
Schäuble acknowledged that any exit from expansive monetary policy would be “a difficult task to solve” for the ECB, as moves that look like removing the support could spook financial markets.
   
The German minister also cast barbs at fellow eurozone members he sees as laggards on economic reform.
   
“The problem at the moment is not the ECB,” he told the SZ. “A range of member countries are not delivering what they committed themselves to, namely improving their competitiveness.”
   
German inflation breaking away from the eurozone average showed that “the problem is the weakness of other states, not Germany's strength,” Schäuble said.
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