Monday, 25 January 2016
Expropriation of savers, destabilizing the markets, overheating of the real estate markets: Critics see many dangers in the loose monetary policy of the ECB. Its president holds the not entirely wrong.
Mario Draghi has the New Year’s reception of Deutsche Börse used in Eschborn near Frankfurt to the rejected criticisms of the low interest rate policy in his respective European Central Bank, particularly in Germany. The critics had the ECB criticized the expropriation of savers, the threat to the financial stability and the hindrance of structural reforms -. But none of these criticisms hold a further investigation was so Draghi
“What I (the critics) yet never heard discuss is the risk of inaction, “Draghi said. The ECB’s policy is aimed at minimizing the risks in the euro area. Nothing to do in the face of global risks for the recovering European economy would increase the risks, both for price stability and for growth and jobs. “These are in my opinion the real risks to which we should worry.”
As regards the alleged expropriation of small savers by the low interest rate policy of the ECB pointed Draghi calculated on a study by the Deutsche Bundesbank from the Monthly Report October, after which the interest rate of a typical private investor portfolio of a German household had located since 2008 at around 1.5 percent. “This is obviously lower than the average for the years before the financial crisis – but it is by no means an expropriation of savers,” he said
What the allegation is concerned, the QE-called low interest rate policy of the ECB which jeopardizes stability. the financial markets, Draghi pointed to the much better stability of the euro area banks. Of course, there is also in the markets’ niches of hyperbole “about on some real estate markets. However, the interest rate policy was geared towards macroeconomic objectives, not at combating individual bubbles. “And we should recognize at some point in the future a general overheating in the economy, it is no problem for the central bank to withdraw excess liquidity again,” he said.
Draghi sees “elements of truth” in criticism
Finally, Draghi also took on the charge position, the ECB take the euro-zone countries the incentive for structural reforms, because the low interest rates, such reforms could no longer be appearing as urgent. On the one hand it is not the task of the ECB, to force the governments of the common currency area to structural reforms. But on the other hand there is also no direct relationship between the level of interest rates and the willingness of individual states, to tackle long-term structural reforms.Read more about
Draghi concluded from all these criticisms, that any criticism in itself, although elements of truth contained – but at the same time suppress other aspects or not to the same extent to the discussion point. Ultimately, the ECB policy is geared to minimize risks. And that is especially important in times of uncertainty, such as now.
While the European economy does not reveal signs of an upturn this year, came from the global economy signs of weakness. “Our first task must therefore be to ensure that the strength of the domestic market will prevail against the global weakness.” For this, the strengthening of confidence in the stability and the future of the euro zone is an important element.