EXCLUSIVE: A planned bond-buying programme expected from the European Central Bank (ECB) today (22 January) would be unconstitutional, a leading MEP has told EurActiv in the firmest statement of German opposition to the move.
“I do not think it is the responsibility of the ECB to be taking political decisions and that is what will happen” with t?he planned bond-buying programme, or quantitative easing, said Markus Ferber, a leading German MEP from the centre-right European People’s Party (EPP).
“That’s why I think it’s beyond the mandate [of the ECB],” Ferber told EurActiv in an interview.
Ferber’s intervention is significant because he is Vice-Chair of the Committee for Economic and Monetary Affairs in Parliament, and his criticisms go further than other German political interventions.
The bond-buying plan is meant to boost the eurozone’s economy by motivating banks to shed their bonds and issue more credit for the economy.
But experts in Germany have warned of falling prices and ebbing investment, while the government attempts to distance itself from the upcoming ECB decision.
Ferber agreed with the analysis of German Finance Minister Schäuble, who has made it clear that he does not see a threat of deflation in Germany and Europe.
In December, living costs in the eurozone decreased for the first time in more than five years, by 0.2%. Many analysts are concerned that falling prices and dwindling investments could result. But in Germany, consumption is strong, a condition Schäuble said works against deflation.
‘We do not have deflation’
“The core mandate [of the ECB] is price stability, at the moment they are fighting against something that is not occurring,” Ferber said, adding: “We do not have deflation, if you reduce the effects of the oil and gas prices we have inflation in the EU and I have the impression that the ECB is fighting against something that is not happening.”
However Schäuble has demonstratively taken a backseat on tomorrow’s ECB decision. “The monetary policy decisions are made by the ECB,” the centre-right politician said on Tuesday in New Delhi. Structural reforms and a sustainable financial policy are indispensable in euro area countries, he emphasised.
By contrast Ferber made his opinions perfectly clear.
“I think it’s contradictory to decide [on quantitative easing] before France and Italy’s budget plans are laid, and in the week before Greek elections. I do not think it is the responsibility of the ECB to be taking political decisions, and that is what will happen with a [QE] decision of the ECB, and that’s why I think it’s beyond the mandate,” Ferber told EurActiv.
Strong German criticism of the move has come from economic analysts, such as Lars Feld, who is on the German government’s Council of Experts for economic policy.
“Without reforms, Italy and France will continue to struggle along, which has negative effects on our exports,” Feld told Bild.
Industry leaders and bankers have also complained. “The markets have already reacted,” Martin Wansleben, CEO of the German Chamber of Commerce and Industry, told Reuters news agency. “The low euro exchange rate is also a reaction to the ECB’s planned bond-buying scheme.”
“The ECB is prematurely firing its last bullets. The instrument of bond-buying should be reserved for economic emergency conditions,” the Deutscher Kreditwirtschaft (DK), a group of numerous German bank associations, said in a statement on Tuesday (20 January).
Politicians have been more reticent , however.
“You know that our position, represented internally and outside, is that the European Central Bank shall reach its monetary policy decisions independently,” German government spokesman Steffen Seibert said on Monday (19 January).
German Chancellor Angela Merkel has said any move by the ECB to buy government bonds with new money should not be used as an excuse to put such reforms on the back burner. Such reforms are vital to improving competitiveness, she explained.
The European Central Bank agreed on 6 September, 2012 to launch a potentially unlimited bond-buying programme to lower struggling eurozone countries' borrowing costs and draw a line under the debt crisis.
ECB President Mario Draghi said the new plan, aimed at the secondary market, would address bond market distortions and "unfounded" fears of investors about the survival of the euro.
The German Central Bank (Bundesbank) is opposed to bond-buying, saying it is akin to bailing out states.
Draghi said the ECB would only help countries that signed up to and implemented strict policy conditions, with the eurozone's rescue fund also buying their bonds, and preferably with the IMF involved in designing and monitoring the conditions.
- 22 January 2015: ECB Decision on quantitative easing expected
- 25 January: Elections in Greece
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