Blame Game

Bickering is Getting Us Nowhere

Going head to head is hurting both the ECB and politicians.
  • Why it matters

    Why it matters

    Getting on the same page is critical to preventing the euro zone from falling into a third recession since 2008. Problems are widespread – ranging from low inflation to the need for structural reforms.

  • Facts


    • The European Central Bank has announced a series of unprecedented measures to expand its balance sheet by buying assets on the secondary market.
    • Euro zone growth has stagnated and the 18-nation currency bloc continues to face the threat of deflation.
    • The ECB, like most central banks, is an independent institution that is not directly accountable to governments.
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Germany holds the European Central Bank’s independence in high regard. So, understandably, indignation breaks out in Berlin whenever French politicians campaign for exchange-rate targets or Italy calls for purchases of government bonds. But right now it’s not politicians in Paris or Rome giving public advice to ECB President Mario Draghi – German counterparts are taking their turn.

It happened again Wednesday. Politicians in Berlin criticized Mr. Draghi on the heels of speculation the ECB might start buying corporate bonds in addition to the previously announced purchase of asset-backed securities. Norbert Barthle, the chief budget expert of the right-leaning Christian Democrat-Christian Social Union parties, warned of “incalculable risks.” The head of the CDU-CSU parliamentary group’s finance committee, Hans Michelbach, accused Mr. Draghi of providing speculators with “new money to gamble with.” 

The ECB president’s hyperactivity is certainly unsettling. Before the central bank has even started buying securities, ECB officials are already talking about their next move. The bank has to be careful its actions don’t convey a sense of helplessness.

The ECB keeps announcing new, unconventional measures, but the euro zone’s economy refuses to pick up steam and inflation continues to fall ominously.

So, there are grounds to doubt whether Mr. Draghi’s medicine will work. But what’s remarkable is that the criticism and calls for the ECB to stop intervening are made as if they were the most natural thing in the world. The CSU bigwigs aren’t the only ones taking the ECB to task – warnings to the central bank have come from the coalition government’s finance minister, Wolfgang Schäuble, too.

The nightmare scenarios haven’t happened, but ECB actions thus far haven’t produced good results either.

The flak is partly Mr. Draghi’s own fault. He has expanded the ECB’s mandate in a bid to save the euro. An institution with this kind of power has to live with criticism. But it wouldn’t hurt if those pointing fingers engaged in a little introspection themselves.

So far, Mr. Draghi’s “Outright Monetary Transactions” program – a pledge to buy unlimited bonds of E.U. countries in crisis – has not become the feared bottomless pit for billions of taxpayers’ money. Not one government bond has been purchased up to now. Nor has the extremely relaxed monetary policy led to hyperinflation, as some predicted.

The nightmare scenarios haven’t happened, but ECB actions thus far haven’t produced good results either. That’s Mr. Draghi’s big problem. But politicians share the blame: Governments failed to use the time Mr. Draghi bought for them. That applies to France, Italy and all the euro zone states, which, following the E.U. banking union initiated in 2012 in response to the economic crisis, neglected to implement further reforms.

Politicians and the ECB each have good reasons to criticize themselves. Instead, they’re on a collision course. That’s not reassuring.


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