Mario Draghi confronted German politicians head on yesterday over their criticism of the European Central Bank (ECB)’s controversial monetary policies.
In a speech to the Bundestag, Germany’s parliament, before private meetings with MPs, Draghi also reiterated his calls for Eurozone countries to share the burden of stoking economic growth and insisted negative interest rates were not to blame for the woes of unnamed German banks.
Draghi came under heavy criticism from German officials earlier this year who attacked the ECB for eroding the value of savings by sending interest rates down to unprecedented levels of 0.4 per cent and undertaking a €80bn (£69bn) bond-buying programme.
However, the Italian ECB chief put paid to those attacks by ordering elected politicians not to undermine the independence of the central bank and focus on how their own policies could support growth.
Yesterday he came out fighting again.
“Our measures are working,” he told MPs. “They are contributing to keep the recovery on track, thus creating jobs and ensuring a recovery that ultimately also benefits savers and pensioners in Germany and the Eurozone as a whole.”
Nevertheless, Draghi said he was not blind to those who have concerns, insisting the ECB takes them “seriously”.
Draghi also faced pressure to speculate on the future of Deutsche Bank, as rumours about a high-profile government bailout gather pace. Deutsche Bank has led the criticism of the ECB’s extraordinary interest rate policy, claiming it squeezes their profits.
Taking the plunge: Negative rates across the world
|Eurozone (European Central Bank)||Minus 0.4 per cent|
|Japan (Bank of Japan)||Minus 0.1 per cent|
|Sweden (Riksbank)||Minus 0.5 per cent|
|Switzerland (Swiss National Bank)||Minus 0.5 per cent|
|DEnmark (Danmarks Nationalbank)||Minus 0.65 per cent|
While refusing to comment explicitly on the lender, Draghi said: “Those who blame ECB policy for the mixed performance of certain German financial firms have been very vocal.
“But what has been forgotten is that many banks have been able to more than offset declining interest revenues with higher lending volumes, improved loan performance and lower interest expenses, all of which are beneficial to both the banks and their customers.”
In a tense address to some of his fiercest critics, Draghi also told German policymakers they - and other countries in the Eurozone - had space to relax the purse strings in a bid to assist the ECB in trying to raise growth and inflation.