Sabine Lautenschläger, Germany’s representative on the European Central Bank’s executive board resigns!

Missed this development:

Today, Sabine Lautenschläger, Member of the Executive Board and Governing Council of the European Central Bank (ECB), informed President Mario Draghi that she will resign from her position on 31 October 2019, prior to the end of her term of office. Ms Lautenschläger has been a Member of the Executive Board and Governing Council since 27 January 2014 as well as serving a full term in office as the Vice-Chair of the Supervisory Board of the Single Supervisory Mechanism (SSM).

President Mario Draghi thanked her for her instrumental role in helping set up and steer Europe-wide banking supervision, a key pillar of banking union, as well as her unwavering commitment to Europe.

She was unhappy with the ECB decision to restart the bond buying program. This means there is no German on ECB Board, a central bank designed on the lines of Bundesbank.

I had blogged how German presss see Draghi as a devil.

Bundesbank chief Weidmann in this interview says ECB has gone too far:

New bond purchases and even higher penalty interest rates for banks. Is that what’s needed in your opinion, too?
Economic activity has cooled down, mainly in Germany but also elsewhere in the euro area. So inflation is expected to be somewhat lower. The ECB Governing Council has now adopted a very comprehensive package that will provide even more monetary policy accommodation. But I think it has gone too far with this decision. You see, the economic situation is not all that bad, wages are growing strongly, and the spectre of deflation – that is, of persistently contracting prices and wages – is nowhere to be seen.

….

You’re a longstanding critic of the ECB’s monetary policy – but are your views falling on deaf ears at the ECB? Doesn’t Draghi care what you say or do?
I’ve always singled out government bond purchases for criticism because there is a danger they might blur the boundary between monetary and fiscal policy. That is why we established clear constraints for these purchases on the Governing Council, not least because I pushed for them. So my concerns were taken on board. These new purchases, however, will call these constraints into question in the foreseeable future. And incidentally, I’m not alone with my critical stance. Mario Draghi, remember, indicated that opinion is divided on the Governing Council.

Are zero interest rates destroying our savings culture and eroding confidence in our economic system?
You’re right to say that monetary policy is currently placing a strain on savers. But it’s always a good idea to put some money away for later and to provide for old age, even if interest rates are low. And it’s not as if people have stopped saving altogether. But I do agree with your point that when a public sector institution like the central bank chooses which instruments to use, it needs to make sure that its actions do not deeply unsettle people. That also means that people can count on their money retaining its value, that is to say, that the central bank will pursue its objective of price stability.

A big development!

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