German Finance Minister Wolfgang Schaeuble issued an unusual warning to the European Central Bank on Thursday, saying rate decisions must not offer “false stimulus” and that monetary policy alone would not solve the euro zone crisis.

The ECB cut interest rates to a record low this month and said it could take them lower still to prevent the euro zone recovery from stalling.

The ECB move was not welcomed by many in Germany, where growth is more robust than elsewhere in the euro zone. However it is unusual for German politicians to comment directly on monetary policy as they view ECB independence as sacrosanct.

“Monetary policy cannot offer false stimulus,” Schaeuble said in a speech at an insurance industry event, where he also offered the insurance sector support as it battles the effects of low interest rates.

“Monetary policy alone cannot offer a way out of the crisis,” Schaeuble said, adding the ECB had made its contribution to solving the crisis.

“The ECB’s mandate must remain narrow. The ECB cannot remedy all the deficits of the EU, that is the task of politicians,” he said, reiterating the German mantra about the need for politicians to tackle debt.


One problem he highlighted was the effect of low interest rates on insurers. Rock bottom yields choke off their investment income and raise costs of future guarantees to policy holders.

Germany has ordered insurers to cut the interest rates they can offer on new savings policies and also forced them to build up reserves to cover the yawning gap between low current rates and future liabilities.

Schaeuble said he understood the burden the industry faced in the current low interest-rate climate and said Germany’s new coalition government – expected to emerge before the end of the year after marathon negotiations – would try to help insurers.

“In the long term this cannot be a sustainable business model. Customers notice that there is an effect of low interest rates on returns. Customers become nervous,” he said.

“The regulatory conditions must be adjusted to the particularities of a low interest-rate environment.”

“I want to reassure you that the future German government will work at a European level to ensure there are conditions that make it possible for insurers to fulfills their obligations.”