The European Central Bank faced a multi-pronged assault today (13 January) as former Italian Prime Minister Silvio Berluscon was revealed to have filed a case against the bank and Germany’s finance minister told it how to do its job.
Former Italian PM Berlusconi and his Fininvest holding company have filed a case against the ECB at the European Court of Justice, court documents showed today (13 January).
The records did not contain any information about the case other than that it was filed on 23 December. The ECB declined to comment.
In October, the central bank opposed Fininvest owning a “significant stake” in Banca Mediolanum. Fininvest said at the time it rejected the ECB decision and would act to protect its interests.
Back in 2014, the Bank of Italy told Fininvest to sell over 20% of its 30% stake in Mediolanum after Berlusconi was convicted of tax fraud and ruled unfit to control more than 10% of a financial company. However, an appeal court later ruled in the company’s favour and the forced resale was cancelled.
The European Central Bank was also told today to begin winding down its expansive monetary policy in 2017 as inflation returns in the eurozone, German Finance Minister Wolfgang Schäuble said.
The ECB fixed interest rates at record lows in the 19-nation single currency area, as well as offering cheap loans to banks and buying up tens of billions of euros per month of government and corporate debt.
The moves are designed to make more cash from the financial system available to the real economy, powering growth and investment and driving inflation towards its target of just below 2.0 percent.
German economists and political leaders have long grumbled about the policy, objecting that low interest rates hurt savers.
With interest rates on many savings accounts lower than inflation, Germans’ cash piles will shrink in real terms if prices continue to grow and rates remain unchanged.
“I share the concerns” of savers, Schäuble told the Süddeutsche Zeitung, noting that inflation is expected to rise further in 2017.
In Germany, prices increased faster in December than in the rest of the eurozone, at 1.7% compared to an average of 1.1%.
There is “ongoing evidence of German inflation picking up markedly”, IHS Markit economist Howard Archer tweeted Friday, warning that the rise would “fuel tensions with the ECB”.
Schäuble acknowledged that any exit from expansive monetary policy would be “a difficult task to solve” for the ECB, as moves that look like removing the support could spook financial markets.
The German minister also cast barbs at fellow eurozone members he sees as laggards on economic reform: “The problem at the moment is not the ECB,” he told the SZ.
“A range of member countries are not delivering what they committed themselves to, namely improving their competitiveness.”
German inflation breaking away from the eurozone average showed that “the problem is the weakness of other states, not Germany’s strength,” Schäuble added.