FRANKFURT – The head of Germany's largest bank said Wednesday the European Central Bank should begin the process of ending its very accommodative monetary policy, regardless of the strength of the euro.
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Speaking at a banking conference organized by German newspaper Handelsblatt, John Cryan, Deutsche Bank's chief executive, said that while cheap money has helped countries and banks escape the crisis, it has also led to "ever greater upheavals."
He noted record real-estate prices in advanced economies. "The stock market appears only to know one direction," he said, adding "we are now seeing signs of bubbles in more and more parts of the capital market, where we wouldn't have expected them."
The comments further highlight the discomfort among many in Germany over the ECB's ultra-generous monetary policy, which includes a negative rate on deposits that banks leave at the central bank overnight.
"The era of cheap money in Europe should come to an end, despite the strong euro," said Mr. Cryan. "I welcome the recent announcement by the Federal Reserve and now also from the ECB that they intend to gradually bring their loose monetary policy to an end."
"The central banks must, however, plot a middle way that averts massive losses on the markets," he said.
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Speaking at the same conference, German Finance Minister Wolfgang Schäuble said "every one hopes worldwide that we come to a normalization as soon as possible. I believe that with the good, stable economic development of the eurozone we are much closer to this normalization than pessimists would have thought one year ago."
The German minister, who in the past has sharply criticized ECB policy, said, however, that he supported the central bank's independence.
The comments come one day before the ECB is set to announce its monetary policy decision. Economists said they expect the ECB to announce how it intends to unwind its large-scale bond-buying program. The ECB isn't expected to provide many details about the end of quantitative easing at its meeting Thursday, but it may provide signals it is preparing the exit from its asset-buying program.
Mr. Cryan also gave Frankfurt an endorsement as the top location to relocate after Brexit. He said that jobs would come to Dublin, Amsterdam and Paris. But "in reality, none of these locations have the structures in place to assume a large portion of the business from London," he said.
"There is only one European city which can fulfill these requirements and that is Frankfurt."
Mr. Schäuble also plugged for Frankfurt as the new home of the European banking rule-setter the European Banking Authority, which is currently in London, but will have to leave due to Brexit.
"It is entirely logical that [EBA] comes to Frankfurt. I know other countries have applied for it, but I hope we can get it for Frankfurt with better arguments," he said.
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(END) Dow Jones Newswires
September 06, 2017 06:50 ET (10:50 GMT)