ECB’s decision to pay money to banks if they finally increase their lending business as well as the purchase of corporate bonds within the PSPP (Public Sector Purchase Programme) has encountered in Germany’s financial and academic community almost unanimous disapproval. Moreover the German public follows Draghi’s policy with rapidly growing distrust. Had the Germans known, what sort monetary policy would have been led in the long run by ECB on behalf of „ European interests“, they would have shown more resistance in 1992 during the debate on the Maastricht Treaty. Today there is a clear feeling amongst the Germans of being betrayed.
As a matter of fact it cannot any longer be concealed from the public that ECB’s non-conventional policy is not only highly controversial but for the time being totally ineffective: Inflation rates decrease and growth remains very weak in the Eurozone. Even those friendly observers of ECB who advocated a lenient assessment of its policy must admit that the PSPP has become a disproportionate risk compared to its zero-effectiveness.
But the German public does not only reject ECB’s policy. The average citizen is appalled by its governance. Whereas Germany’s Bundesbank is the biggest shareholder of ECB, its president Jens Weidmann has been totally marginalized. He continues to voice his objection in public but in the Governing Council of ECB he has too few followers as France and Italy together with the other southern countries are the major players. On Thursday last week there was a première in the Council as Weidmann was even not allowed to vote. The principle of rotating voting rights excluded Bundesbank from the vote on expanded QE. And Bundesbank will no doubt implement the measures decided by ECB. Politicians in Germany are incapable of explaining to the public why the biggest economy in Europe and the biggest shareholder of ECB is deprived from its voting rights. Europe begins to be no longer understood by the Germans. The moment might be not too distant when the Germans will stand up to fight instead being held liable for the consequences of a policy which they are fundamentally opposed to. That bright day might come sooner than Dottore Draghi and his French colleague Coeuré think. Then the disenchantment of two ECB key decision takers will not any longer be compensated by the trust of the financial markets because they have been assuming that Germany would always follow. That might change all of a sudden. So the end game of ECB and the Eurozone has perhaps started on March 10th 2016.