Bundesbank chief warns on freedom of ECB

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HANS TIETMEYER, president of the Bundesbank, warned yesterday that the success of the single currency depended on the freedom of the European Central Bank from political interference. It would also be essential, he warned, for member governments to stick to the tough budget policies set out in the stability pact. Although Mr Tietmeyer said the appointments to the executive board of the ECB would enhance its credibility in the financial markets, he expressed disappointment over the row about its presidency, settled in a last-minute fudge at the special summit earlier this month.

"Some of the incidents in Brussels during the first weekend in May may in this context have been a timely warning, and a lesson to be learned by all," he said, delivering the Mais Lecture at the City University Business School last night. More controversially, Mr Tietmeyer insisted the ECB should not be accountable to national parliaments. "Actual independence from the influence of political bodies is essential for the future credibility of the European Central Bank."

And to ensure that monetary policy did not conflict with national economic policies, it would be essential for member governments to stick to strict budget disciplines, he warned. Mr Tietmeyer also backed calls for structural reforms that would make the Continental economies more flexible.