Mario Draghi is far more frank and open than either Trichet or most central bankers around.
A nice interview of him by Alexander Hagelüken and Markus Zydra of Süddeutsche Zeitung. He says ECB would love it if it could always work together with Bundesbank :
SZ: How uncomfortable do you feel in the country of the Bundesbank?
Draghi: I have often said that the Bundesbank is a great institution, and I respect it very much. It would be great if we could always work together. We have done that many times, but at the moment, we have different opinions on the best way to react to the crisis. We all share the same objective of delivering on price stability, but we are not in full agreement about the best way to achieve that.
SZ: And the German people?
Draghi: We need to explain what we do better in Germany, which our intentions are and what precautions we are taking.
SZ: You could speak to the Bundestag.
Draghi: It would be an opportunity to explain what we do in greater detail. If I am invited, I would be very happy to go there.
On Bundesbank chief Weidmann not liking the recent bond prog:
SZ: Your new bond purchasing programme reminds us of Italy in the 1970s, when the central bank helped the state out in its financing, which only increased the problems.
Draghi: That was something completely different. It took place decades ago, when the Italian central bank wasn’t independent from the state. In Italy things have changed completely since then. Banca d’Italia has now been independent for decades, and has not financed any government deficit. We have to move away from clichés of the past if we want to address the future!
SZ: The Bundesbank has a different view: Jens Weidmann fears that the ECB’s monetary policy is financing fiscal deficits.
Draghi: No, the Governing Council disagreed with that view. What has been decided is a monetary policy measure. There is a fundamental difference between buying on the primary market, which is forbidden because the money would go to the government, and buying on the secondary market where the money does not go to the government but to bond holders. Article 18 of the Statute states that the ECB may “buy and sell […] marketable instruments” as part of its mandate, if necessary to achieve price stability, of course always respecting the Treaty’s Article 123 on the prohibition of monetary financing.
SZ: Where does the German opposition come from?
Draghi: It comes from the history of the country and the fear of inflation. But it has to be clear that in the case of EFSF/ESM support, the parliaments of the euro area countries will be involved.
Imagine the complexity of ECB. Headquartered in Frankfurt along with Bundesbank. Modeled on latter and now not really liked by the originator itself. How much ECB has changed under Draghi. What is even more interesting is that all these changes happen despite ECB functioning on the basis of committee decisions… Draghi seems to have changed the perception of the committee as well…It looks far more authoritative than collegian..