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(Bloomberg) -- Europe’s program of quantitative easing will prove effective only if accompanied by structural change including in the banking system, said Axel Weber, the former head of Germany’s central bank.

Small and mid-sized companies depend on banks for credit, he said in an interview Thursday with Bloomberg Television at the World Economic Forum in Davos. Banks at present are focused on raising capital, not on lending, he said.

“Europe needs to fix the banks,” said Weber, who is now the chairman of UBS Group AG, Switzerland’s biggest bank. “The central bank can help with that.”

He spoke as the European Central Bank prepared to announce a program to fight low inflation and shore up the economy. It is expected to involve large-scale purchases of government bonds, known as quantitative easing, in a bid to spur lending to small and mid-sized companies, the backbone of the European economy.

To achieve long-term economic growth, politicians need to “step up” and introduce structural reform to increase competitiveness, said Weber, who was head of the Bundesbank during the 2008 financial crisis and the ensuing European debt crisis.

While companies may gain from tailwinds of a weaker euro, “if you want competitiveness you have to earn it,” he said.

To contact the reporter on this story: Jeffrey Vögeli in Zurich at jvogeli@bloomberg.net To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net Cindy Roberts, Frank Connelly

Bloomberg