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(Bloomberg) -- Chancellor Angela Merkel left her allies in Germany to voice outrage over the European Central Bank’s bond- buying program and instead issued an indirect warning over its potential risks.

“The world is amply supplied with liquidity right now,” and governments should seize the moment to reduce debt, Merkel said at the World Economic Forum in Switzerland. “This liquidity supply is such that you can’t really precisely see who is competitive or who isn’t quite there yet.”

Merkel’s comments highlighting the risk of undermining economic reforms were her most detailed critique of the $1.3 trillion asset-buying plan unveiled by Mario Draghi in Frankfurt as she sat on the stage in Davos. Members of her coalition have resisted the proposal for months, and Bundesbank President Jens Weidmann described it as “sweet poison” last June.

While Merkel expressed renewed respect for the ECB’s independence, her remarks reflect German unease at what many in her governing party see as ever-greater ECB intervention in keeping Europe’s debt crisis at bay and holding the 19-nation euro area together -- at Germany’s expense.

“The ECB is moving ever further away from its task,” Hans Michelbach, the top-ranking lawmaker from Merkel’s caucus in the German parliament’s finance committee, said in a statement. The ECB is “violating the ban on financing states” and “can no longer be described as a bastion of stability,” he said.

Heaping Criticism

Other members of Merkel’s governing Christian Democratic bloc heaped criticism on Draghi, saying ECB purchases of euro- area government bonds breaches the central bank’s mandate, helps the currency union’s southern countries and artificially boosts Europe’s competitiveness by devaluing the euro.

Speaking in Davos, Merkel said that central-bank action can’t replace efforts by euro-area governments to make their economies more competitive. While praising efforts in Italy and France, she said that time is running short and cheap money risks introducing distortions.

“How am I to evaluate whether we’ve done a better job of tilling the field rather than relying on buying time through other measures to liberate ourselves from the issue of structural reforms?” Merkel said.

She cited the Swiss National Bank’s unexpected decision on Jan. 15 to drop a cap on the franc, which triggered global market convulsions and an appreciation of almost 30 percent of the Swiss franc versus the euro. The euro dropped to an 11-year lows after Draghi’s announcement, falling 1.2 percent to $1.1471 at 10:02 a.m. in New York and touching $1.1453, the weakest level since November 2003.

“Suddenly the difference is there between the franc and the euro,” Merkel said, noting the market-determined value rather than the artificial peg. “We need to prepare for this day, so that nobody’s able to say that nobody could have known. That’s my only point that I stand by.”

--With assistance from Birgit Jennen and Brian Parkin in Berlin.

To contact the reporters on this story: Patrick Donahue in Florence, Italy at pdonahue1@bloomberg.net; Rainer Buergin in Berlin at rbuergin1@bloomberg.net To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Tony Czuczka

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