Mr Weidmann is essentially calling on the German and other European governments to come clean about the fiscal consequences of a monetary union rather than disguising them within the Eurosystem.
The eurosystem has been rendered more fragile and subject to destabilisation.
"The governing council has tasked ECB staff and the relevant eurosystem committees with ensuring the timely preparation of further measures to be implemented, if needed".
"A workable compromise for the ECB would be a hybrid programme with a core component in which financial risk is shared across the eurosystem, and an optional component relating to national central bank risk," said the investment bank's European economist, Elga Bartsch.
The Bundesbank interprets them as a symptom of the wider crisis, in which the Eurosystem has been taking on more and more credit risk, rather than as a separate source of trouble in themselves, says Andreas Dombret, the board member responsible for financial stability.The real flashpoint between the two institutions is bond-buying.
This does not appear on the ECB's balance-sheet but on those of the 17 NCBs of the euro area, which together with the ECB make up the Eurosystem.
But the ECB is owned by the 17 euro-area NCBs, and the combined capital of the Eurosystem was worth over €80 billion at the start of June.On the face of it, then, the ECB should be able to withstand losses arising from a default, even if it needed further recapitalisation by its NCBs.
The NCBs in the Eurosystem settle payments between one another through their "Target2" accounts.
Analysts at SocGen, the French bank, write thatWe estimate now the total eligible market size that the Eurosystem can buy is €4471bn in nominal terms and €5665bn in market value.
First, it exposes taxpayers in northern countries to risks that belong to those in southern states, but does so opaquely within the Eurosystem rather than openly.
