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.
“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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