ECB's Weidmann: Pressure on Central Banks Risks Currency War!

• ECB’s Weidmann: pressure on central banks risks FX competition! 
  by http://www.reuters.com/
  Jan 21 (Reuters) – Loading central banks with more tasks and pressing them to pursue more aggressive monetary policies could risk a round of competitive devaluations, European Central Bank policymaker Jens Weidmann said on Monday, citing pressure on the Bank of Japan.
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  Weidmann is the latest in a string of policymakers worldwide to warn of the threat of a “currency war” as central banks pump out cash to support their economies, reducing their value in the process.
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  He said the pressure that Japan’s new government has put on the BOJ to deliver bolder monetary easing endangered the central bank’s independence, as did the actions of Hungary’s government.
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  “Already alarming violations can be observed, for example in Hungary or Japan, where the new government is interfering massively in the business of the central bank with pressure for a more aggressive monetary policy and threatening an end to central bank autonomy.”
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  “A consequence, whether intentional or unintentional, could moreover be an increased politicisation of exchange rates,” the Bundesbank chief, who also sits on the ECB’s Governing Council, said in a speech at a Deutsche Boerse New Year’s event.
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  “So far the international currency system has come through the crisis without a devaluation competition, and I hope very much that remains the case,” Weidmann added in a section of his speech entitled “independence of central banks in danger”.
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  Last Wednesday, Russian central banker Alexei Ulyukayev said Japan is acting to weaken its currency and there is a danger that others will follow suit and foster a round of destabilising devaluations.
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  Russia holds the G20 presidency this year, a forum at which currencies and their relative values is likely to surface.
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