Head of the Ifo Institute Warns of the Return of the ‘Euro Crisis’

The head of the German economic institute Ifo, Clemens Fuest, announced in an interview with Passauer Neue Presse the return of the ‘euro crisis’ and called on the European Bank to exit its relaxed monetary policy, including zero and negative interest rates.

Fuest explained that the noticeable recovery in the eurozone, rising inflation rates, and increasing prices of stocks, shares, and real estate are reasons why the European Central Bank should change its policy.

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– The longer this lasts, the more painful it will be when the money dries up, – said Fuest, adding: ‘It is time to start the exit process.’

The European Central Bank confirmed its cheap money policy at the last press conference and remained open to further purchases of corporate (and qualified state) bonds, despite the best economic indicators in the eurozone since the global financial crisis, reports the New York Times.

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– Many eurozone countries have significantly higher debt now than before the crisis. Banks in those countries are still not as stable as we would like. Many will resort to government bonds without additional capital guarantees. Therefore, it should be expected that the crisis will return during the next recession, predicts Fuest.