German Finance Minister Wolfgang Schaeuble warned in an interview published on Monday that central banks should be on the lookout for inflation risks arising from a liquidity glut.
"It is crucial for all central banks to withdraw from their extraordinary measures at the right time in order to prevent the generous liquidity provisions from leading to inflationary pressure," he told Thailand's The Nation newspaper.
Central banks in Europe, the United States and Japan have flooded markets with liquidity through asset purchases and ultra-long loan operations and have cut interest rates close to zero percent to stimulate growth in their economies.
Schaeuble, who was in Thailand for a meeting of the ASEM forum of Asian and European finance ministers, said it should not be forgotten that excess liquidity was one of the reasons for the 2007/2008 financial crisis.
The minister reiterated his conviction that the European Central Bank was acting within its mandate with its plan to reduce the borrowing costs of struggling euro zone states by offering to buy their bonds.
But he said its principal mandate remained safeguarding price stability in the currency area.
(Reporting by Gernot Heller via Berlin Newsroom; Writing by Stephen Brown; editing by Patrick Graham)