German Economy Minister Says Liquidity Not a Cure-All

Extra liquidity alone won't resolve the euro zone's debt problems, German Economy Minister Rainer Bruederle said on Thursday as financial markets' hopes grew of more action from the European Central Bank

Bruederle warned that pumping too much money into the economy risked creating new bubbles.

The ECB is expected to say it will keep unlimited liquidity operations in place for longer when its monthly meeting ends on Thursday but investors are also hoping for at least a hint it will increase the value of government bonds it buys.

The bank is unlikely to announce mass new bond purchases, however, and Germany's representatives at the ECB have opposed the program from the start.

"Permanently printing money is not the solution," Bruederle said. "The money presses must not fall into the hands of politicians."

The ECB will be under pressure to unveil new steps to stabilize the euro zone at the meeting as the currency bloc battles a crippling debt crisis that has stoked contagion fears in the United States and Asia.

Germany struggled to sell its government debt on Wednesday and Portugal's borrowing costs soared in further signs an 85 billion-euro ($110.7-billion) EU/IMF rescue of Ireland last weekend and public assurances from leaders that the euro will be defended at any cost have failed to impress investors.

Bruederle reiterated that the ECB should remain independent and not fold to pressure from politicians to print money, describing the last U.S. fiscal stimulus package as excessive.

"The Americans are permanently producing liquidity," he said. "I see a big danger that our American friends exaggerate."