ECB's Weidmann warns against large-scale bond buys

FILE PHOTO: A man cycles towards the European Central Bank (ECB) headquarters in Frankfurt, Germany, July 8, 2020. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - Large-scale bond purchases by the European Central Bank risk encroaching on fiscal policy, which is beyond the bank’s mandate, Bundesbank President Jens Weidmann said on Wednesday, repeating his long-standing criticism of quantitative easing.

“Large-scale purchases of government bonds can be a legitimate and effective tool of monetary policy,” he told a conference. “But, as I have stressed numerous times, they risk blurring the lines between monetary policy and fiscal policy.”

“We should also pay close attention to how we interpret our mandate,” he said. “The more widely we interpret our mandate, the greater the risk that we will become entangled with politics and overburden ourselves with too many tasks.”

Reporting by Balazs Koranyi; Editing by Gareth Jones