EUROPE EU, NEWS Friday, 23 January, 2015
The plan of purchases of government bonds by the ECB will transform the national central banks in the major creditors of the public debt of the euro area countries, and this will entail risks for both fiscal discipline and for the independence of monetary policy of the ECB. This outburst of the president of the Bundesbank, the arcifalco Jens Weidmann who was among the toughest opponents in the past months of negotiations, the quantitative easing yesterday decided by the Governing Council.
The German central banker expressed its “doléances” in an interview with the main newspaper of the country, the tabloid Bild, of which the content has been anticipated with a press launch.
The maneuver of the ECB “carries the risk that the discipline budget is neglected “, said Weidmann. And the relevance that the same central banks will hire as creditors of the state could increase the risk of political pressure on the ECB in order to keep rates low. “This will be challenging when you need that rates will return to rise.”
Yesterday, explaining the decisions of the Governing Council, the President of the ECB Mario Draghi pointed out that the decision to start almost immediately, from March, purchases of government bonds was taken with a large majority (so presumably with Weidmann contrary). To share only 20 percent the risk of these securities has been taken by “consensus”, ie without opponents. Finally, establishing that bond purchases are a legitimate tool of monetary policy was taken unanimously.
Weidmann has openly challenged this last principle that has just signed in the directory, but still has not failed to return controversially claiming that “monetary union, purchases of government bonds are a tool unlike any other.”
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