Germany: War of Words with ECB - ING
Carsten Brzeski, Chief Economist at ING, suggests that the German
criticism on the ECB’s monetary policy throughout the crisis is not new
but in recent days, however, it has entered a new stage.
Key Quotes
“Last
Friday, German Finance Minister Schäuble connected the recent gains of
the AfD party in German regional elections at least partly to the loose
monetary policy of the ECB. According to wire reports, Schaeuble said
that he had told ECB President Draghi that 50% of the results of the AFD
party were the consequence of the ECB’s loose and low interest rate
policy.
Schäuble’s comments fit into a series of verbal attacks
on the ECB by German experts, observers and regional politiicans. They
could be seen as a preparation for the upcoming IMF Spring Meetings in
Washington, D.C., this week, where probably the pressure on Germany to
change its stance on austerity and become more stimulus-oritented will
be increased again. Moreover, the German government’s position in the
Greek crisis will also be put to a test again in the coming weeks.
However,
the tone and the direct attack of the ECB by a senior, or better one of
the two most prominent, members of German government is unprecedented.
In
our view, there is no easy or one-dimensional solution for the Eurozone
to gain more momentum. Obviously, the German position is not wrong,
structural reforms and sustainable public finances are one of the main
requirements, but it is not the entire solution. Other growth-enhancing
measures are also needed. Particularly in a Eurozone, in which populist
and separatist parties are gaining momentum. This includes loose
monetary policy but also fiscal policies. To tackle weak growth, adverse
political trends and a possible disintegration of the Eurozone, a
multi-layer approach is needed.
Consequently, the current war of
words is a superfluous as a fifth person on a double date. It is simply
counterproductive. It won’t change the ECB’s monetary policy, which
contrary to what some Germans might think, is not going after Germans’
savings but is simply trying to revive the Eurozone economy and let the
monetary union survive.”
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