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'1970s' policy mentality

May 5, 2014

French PM Manuel Valls has called for monetary policies aimed at weakening the Euro to boost European export competitiveness. A Bundesbank spokesman called the proposal "worrying" and indicative of "a 1970s mentality".

https://p.dw.com/p/1Btq4
euro-zeichen gemalt - symbol vor brandenburger tor
Image: reuters

The Bundesbank, Germany's famously hard-money central bank, is unhappy with French calls for a softer euro. "We observe with concern that French politicians may be falling back into the mentality of the 1970s, a time long before the French franc became a stable currency," a senior official told Bild newspaper on Monday.

The Bundesbank was reacting to French Prime Minister Manuel Valls' saying on Saturday that the euro is too strong, and a major change in European Central Bank monetary policy is needed in order to boost growth and job creation. Valls was speaking to a meeting of young European socialists near Paris.

French politicians pushing for European Central Bank easing

Valls isn't the only French politicians who wants an "active" monetary policy.

Last month, Economy Minister Arnaud Montebourg called for a meeting of eurozone countries to address what France sees as the euro's overvaluation, and agree on unconventional monetary policies to force it lower.

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The euro has gone up five per cent against the dollar over the past year, making it more difficult for European companies to compete on international markets. A number of blue-chip European companies have complained about the euro's strength in their first-quarter reports.

nz/hg (Reuters, AFP)