April 20, 2017 / 6:28 PM / 3 months ago

UPDATE 1-Germany's Schaeuble presses ECB to unwind loose monetary policy

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(Adds Schaeuble quotes, background)

WASHINGTON, April 20 (Reuters) - It would not be a bad idea for the European Central Bank and other central banks to follow the U.S. Federal Reserve's example and change course away from an ultra-accommodative monetary policy, German Finance Minister Wolfgang Schaeuble said.

Speaking on the sidelines of International Monetary Fund meetings in Washington, Schaeuble said the ultra-loose monetary policies in place in many areas of the world were not helpful.

"It is encouraging undue risk-taking, political complacency, capital misallocation and asset price bubbles," he added.

"The Fed has initiated the exit from loose monetary policy. It wouldn't be a bad idea, if the European Central bank and others were to start following this example," he said.

Three ECB policymakers said on Wednesday - days before a tense French presidential election and the ECB's own policy meeting - that prospects for the euro zone economy had improved but the time to withdraw support has not yet come.

Investors are on tenterhooks before Sunday's first round vote in France, where two of the four leading candidates are threatening to leave the European Union and the euro currency.

Any turmoil in the bond market after the French vote would push up borrowing costs for countries and companies - undoing some of the stimulus the ECB is providing - and even raise questions about the euro's survival.

While stressing that the ECB, and not the German government, sets monetary policy for the euro zone, Schaeuble added: "It is true that the euro being undervalued, from a German perspective, benefits our exporters."

German officials have said Schaeuble and his delegation will stress the importance of globalisation and free trade for growth at the talks in Washington this week, as well as the need for reforms to increase resilience against future shocks. (Reporting by Gernot Heller; Writing by Paul Carrel; Editing by Alison Williams)

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