Axel Weber, Bundesbank president, has just dealt another blow to the idea of a European Monetary Fund, as floated by the German finance ministry. Speaking in Frankfurt, Mr Weber objected to talk about the “institutionalisation of emergency help” just as it looked like Greece might actually get its finances back in order.
Listening to him, at the Bundesbank’s annual results press conference, you might have been forgiven for thinking Mr Weber was back in the lecture rooms of Bonn, Cologne and Frankfurt universities, where he worked previously as an academic. The “game theories” he had discussed in his past life had shown how, if the end result was known in advance, the behaviour of participants altered accordingly, he told a crowded room of journalists.
What Mr Weber meant was that if Greece knew it would be bailed-out, it would give up now in its drive to bring its public finances back under control. Thus “constructive ambiguity” – being deliberately unclear about what would happen in the worse case – was an important part of eurozone policymakers’ strategy, Mr Weber concluded.