For goodness’ sake, this Italian is ruining Germany..

Says ECB chief Mario Draghi in this year end interview with Der Spiegel.

He respond to this often criticism of Germans on ECB policies:

SPIEGEL: Are you saying the euro crisis is over?

Draghi: No, but the fears felt by some sectors of the public in Germany have not been confirmed. What haven’t we been accused of? When we offered European banks additional liquidity two years ago, it was said there would be a high rate of inflation. Nothing has happened. When I made my comment in London, there was talk of a violation of the central bank’s mandate. But we had made clear from the beginning that we are moving within our mandate. Each time it was said, for goodness’ sake, this Italian is ruining Germany. There was this perverse Angst that things were turning bad, but the opposite has happened: inflati

It must be quite something for an Italian to head ECB really. Italy is known for its irresponsible economic policy and ECB being modelled on Bundesbank with latter seen as a benchmark for stable economic policy. So, Germans will always criticise in such times.

Further, recently ECB’s German memebr on the boead Jorg Asmussen resigned to join politics. This makes the third German exit from ECB board/ So questions are bound to arise:

SPIEGEL: Mr Draghi, do you know Andrea Nahles?

Draghi: I have heard the name before but I don’t know her personally.

SPIEGEL: Ms Nahles is the new German Labour minister and boss of Jörg Asmussen, your former colleague in the Executive Board of the ECB. That he gives up this prestigious job has caused great surprise in Germany. Did you chase him out?

Draghi: Jörg and I had an excellent personal and professional relationship. I consider it as a great loss for us that he is returning to the government. Of course we did not agree on every occasion.

SPIEGEL: Asmussen is the third German central banker to give up his job prematurely, after Bundesbank boss Axel Weber and the former ECB Executive Board member Jürgen Stark. Why aren’t the Germans happy at the ECB?

Draghi: You can’t compare these cases. Jörg has made it clear that it was only family reasons which prompted him to go back to Berlin. I have no reason to doubt that.

SPIEGEL: In any case, Weber and Stark resigned because of your policy, which led to your famous remark in London a year and a half ago about doing “everything necessary” to save the euro. That means, in an emergency, buying up the government bonds of the crisis-ridden countries and taking on risks amounting to billions for which in the end German taxpayers above all would be liable. Can you understand that many German citizens are at odds with this?

Draghi: Weber and Stark resigned before my arrival at the ECB. But the truth is that conditions in the euro area have improved considerably since then. Consider the latest developments: crisis-ridden countries such as Ireland and Portugal are exiting the bailout programme, the risk premia for loans to crisis-hit countries in southern Europe are declining, and investors from all over the world are once again investing in Europe. In other words, most of the financial-economic data are turning in the right direction.

Much is speculation ofcourse but worthy of a pot-boiler..In India. most econ policymakers would love to join/remain in the central bank. But we see the opposite case here (or perhaps an opposite case in India)..

More trouble ahead for ECB:

SPIEGEL: That sounds rather like Christmas harmony. Some economists in Germany speak of the “Club Med” when they talk about the majority of southern Europeans in the Governing Council and accuse you of copying the inflation policy of the Bank of Italy in the 1970s.

Draghi: There are only a few who are insinuating that I am helping Italy because I’m Italian. This doesn’t affect me. I have proved often enough that I adhere strictly to the mandate of the central bank and run a policy for the entire euro area. This is also true of my colleagues in the Governing Council. No one there thinks in nationalist categories; that applies more to those who voice such unjustified criticisms.

SPIEGEL: But ECB policy is very sceptically viewed not only by the Bundesbank, but also by the Federal Constitutional Court. Probably at the beginning of the year, the Court will decide whether the ECB’s bond-buying programme complies with the Basic Law. Are you worried about the verdict?

Draghi: There is no point in thinking about a court ruling beforehand. But we are certain that with all our monetary policy decisions we are operating within our mandate.

SPIEGEL: Many expect you that the judges will set a limit on government bond purchases. What will you do then?

Draghi: There are already limits. We have said from the beginning that our programme would be limited to the purchase of securities with short maturities. Apart from that, we can only wait, we have no plan B.

Let’s see what 2014 has in store for ECB..


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