August 21, 2012 / 10:03 PM / 5 years ago

German govt set to get less Bundesbank income -paper

BERLIN, Aug 21 (Reuters) - Germany’s government is likely to receive a billion euros ($1.25 billion) less than forecast in income from the Bundesbank next year as the central bank raises its buffer against growing risks from the debt crisis.

Citing finance ministry documents, Bild newspaper reported in its Wednesday edition that the ministry expected 1.5 billion euros next year - compared with budget projections of 2.5 billion, the same amount as this year - and 2 billion in 2014.

To ease banks’ funding strain, the European Central Bank, which sets the policy for the 17 central banks in the euro zone, has given out more than 1 trillion euros in cheap 3-year loans, relaxed the rules for collateral it accepts for central bank money and cut the interest rate to a record low.

While agreeing that such measures were necessary to avert a major credit crunch, some ECB policymakers - led by Bundesbank President Jens Weidmann - have become increasingly concerned about the risk such measures bring with them.

The Bundesbank this week stepped up its resistance to a recent ECB plan to buy billions of euros worth of Spanish and Italian government bonds to reduce those countries’ crippling borrowing costs.

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