European debt crisis could last a decade

 By Andrew Trotman, and agencies

"Overcoming the crisis and the crisis effects will remain a challenge over the next decade," Mr Weidmann, who is also a Governing Council member at the European Central Bank, told the Wall Street Journal. 

"The calm that we are currently seeing might be treacherous" if reforms are not quickly taken across Europe, he added. 

The euro fell sharply after Mr Weidmann said the ECB could reduce interest rates further if economic data warrant it. 

The ECB decided to leave interest rates on hold at its April policy meeting, but ECB President Mario Draghi said the bank would "monitor very closely" all data and stand "ready to act" to boost the recession-hit eurozone. 

While the Bundesbank president cautioned that an interest rate cut might not have a huge impact on the economy, markets took his words to solidify the view that the 17-country bloc's central bank was ready to cut rates from the already record-low level of 0.75pc. 

When asked about interest rates, Mr Weidmann said: "We might adjust in response to new information," but added "I don't think that the monetary policy stance is the key issue." 

The euro traded at a session low of $1.3046, down about 1pc and also hit a session low against the Japanese yen. German government bond futures rose to a session high after the interview was published. 

"Mr Weidmann's statements have such a large impact on the euro, because he is such a heavyweight on the Council," a Frankfurt-based money market trader said. "People listen to him when he says something to that effect, twitch and push the sell button." 

Data on Tuesday showed that inflation in the eurozone eased to 1.7pc in March, and the ECB, in its staff projections, sees it falling further. The ECB targets inflation of below, but close to 2pc. 

Analyst and investor sentiment in Germany, the bloc's largest economy, fell sharply in April, separate data showed on Tuesday. Telegraph