bond buying

Crossing swords with court, Schäuble backs ECB

Deutschlanddinner  – Dr. Wolfgang Schäuble
Normally an ECB critic, Schäuble mounts his defense of the central bank's policy. Source: Nils Bröer for Handelsblatt

Finance Minister Wolfgang Schäuble said he did not share the view of Germany’s constitutional court that the European Central Bank may be violating laws on monetary financing with its €2.3 trillion ($2.7 billion) asset purchase program.

“I don’t share this opinion,” Mr. Schäuble said Tuesday during a business dinner hosted by Handelsblatt. “I believe that the (ECB) mandate is being implemented.”

It was a rare defense of the central bank by Mr. Schäuble who, in the past, has fiercely opposed the ECB’s loose monetary policy. As recent as Monday, he said he hoped the central bank’s ultra-low interest-rate policies, which led to penalties for some deposit holders, would soon come to an end.

During the Handelsblatt dinner, Mr. Schäuble said that the ECB was exhausting the tools at its disposal to “fulfill its hellishly difficult task of devising a monetary policy for many different countries.”

Earlier on Tuesday, Germany’s constitutional court in Karlsruhe said the European Central Bank may be violating a ban on financing government budgets with its €2.3 trillion asset purchase program – mainly of EU member government bonds – and asked Europe’s highest court, the European Court of Justice, to rule on the matter.

In the discussion about the ECB’s independent monetary policy, the finance minister also said it was not helpful to mention Bundesbank President Jens Weidmann as a possible successor to ECB boss Mario Draghi.

Read excerpts of Handelsblatt publisher Gabor Steingart’s interview with Wolfgang Schäuble on the Mario Draghi, Jens Weidmann and the ECB below.

Handelsblatt: The institution that acted decisively in the crisis is the European Central Bank. The head of the ECB, currently Mario Draghi, is viewed as the secret president of the euro zone. But if we are now realizing that the ECB’s policies are not doing any good, isn’t it time to replace the medicine and the medicine man, and put someone like Bundesbank President Jens Weidmann in the position instead? Wouldn’t that be a first, and also a very pragmatic step toward achieving solidarity in European fiscal policy?

Wolfgang Schäuble: I disagree. The central bank is not in charge of fiscal policy, nor does it have the necessary democratic legitimization. It is independent, and its job is to ensure monetary stability. This is an extremely difficult task in a monetary union consisting of 19 countries, all pursuing different economic and fiscal policies. This is not a problem the central bank can solve…

And yet it constantly tries to do so.

It exploits its possibilities. Now the Federal Constitutional Court has just decided that the European Court of Justice should examine whether the ECB is operating within the framework of its mandate. I think it is sticking to its mandate.

Your fellow Christian Democrat, Peter Gauweiler, and the remaining plaintiffs in Karlsruhe have achieved a partial victory. According to the court’s ruling, it has to be determined whether the ECB is still abiding by its mandate, with its massive purchases of government bonds, or is actually engaging in government financing, which is prohibited. In this sense, the position of the ECB president does have an immense European dimension.

Well, of course! But fiscal policy is the responsibility of European governments.

But is the idea of Jens Weidmann as ECB president truly that far-fetched? Wouldn’t having a champion of stability like him at the head of the ECB help, before the position of European finance minister becomes a reality?

There is no point in our having a discussion about filling positions. The ECB is performing its role. We have to strengthen the monetary union, so that it is not burdened with too much economic responsibility and becomes a little overwhelmed. That’s why it isn’t a question of whether Draghi or Weidmann runs the organization. Both are outstanding people. We need the political structures – democratically legitimized – that enable us to pursue a common fiscal and economic policy to the extent needed to allow the common currency to have its beneficial effect.

Jeremy Gray is an editor for Handelsblatt Global. Jan Hildebrand and Thomas Sigmund of Handelsblatt contributed to this story. To contact the authors:,,

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