Jens Weidmann Critical Of ECB's Stimulus Plan

The euro traded steadily above $1.26 on Wednesday following the International Monetary Fund’s decision to downgrade their forecast for the eurozone economy.

The common currency traded at $1.2652 at 8:40 GMT as the bloc continued to struggle with how to kick-start its stalling economy.

Ahead of the IMF’s reduced forecast, Bundesbank President Jens Weidmann gave an interview to The Wall Street Journal heavily criticizing the European Central Bank’s plans to buy private sector bonds.

Weidmann warned that the ECB can’t be the only line of defense against another financial crisis. Instead of using policy to mend the region’s sagging economy, Weidmann said the most important measure was structural reforms, to be carried out in individual eurozone nations.

He also denounced France’s attempt to push forward its 2015 budget, which does not meet the agreed upon deficit targets. Weidmann said that as one of the bloc’s largest economies, France should be leading by example, but instead has become a large part of the problem.

Weidmann’s comments underscore a growing divide between those who believe that the ECB should ease further and those who don’t.

Although ECB President Mario Draghi promised that the bank would roll out a large scale quantitative easing program if need be, Germany’s opposition to such a measure may make it difficult for Draghi to get the votes he needs to implement it. 

Moving forward, markets will be watching eurozone data for any indication about the bank’s next steps. Most are expecting to see some type of bond buying plan to be announced in the near term.