Monetary policy alone cannot solve the world’s economic problems, German Finance Minister Wolfgang Schaeuble said on Friday, warning that too much liquidity can lead to price bubbles. Schaeuble avoided any mention of the European Central Bank, but he has repeatedly warned against an excessive reliance on central bank stimulus at a time when the ECB is paving the way to expand its already massive €1 trillion ($1.12 trillion) asset-buying plan, Reuters reported. “It should not serve as a way out of, or to neglect, what is necessary–that is structural reforms,” he said of central bank policy. Last week, the ECB cut its growth and inflation forecasts and the bank’s president, Mario Draghi, said explicitly the bond-buying program may run beyond September 2016 and the bank may adjust its size and composition. Europe’s recovery, described by the bank as disappointing, is hardly gaining momentum. As a result, the ECB may yet roll out new measures, just six months after it began quantitative easing, considered a policy “bazooka” when it was introduced in January.
