′Stop the Draghi bashing!′ | News | DW | 06.11.2014
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'Stop the Draghi bashing!'

Justified criticism of the ECB's monetary policy is being mixed with rumors about President Mario Draghi's leadership. Stock market expert Konrad Busen says the critics' arguments fail to convince.

"When evidence meets faith, it stands no chance," European Central Bank (ECB) President Mario Draghi said Thursday, as he defended the institution's asset-buying plans and encouraged lenders to grant more credits to the corporate world.

And he took the edge off the current debate about how dangerous these asset-backed securities might be, saying only 1 percent of them on average would fail. That addressed the allegation the ECB would turn into the eurozone lenders' bad bank. The risk of national central banks or taxpayers having to foot the bill on any loss is obviously rather low.

Nonetheless, critics of this part of the ECB's monetary policy, especially here in Germany are up in arms, recalling hyper-inflation during the global economic crisis before World War II, and fearing ECB asset purchases could result in hyper-inflation like back in those times.

But there's no sign of this happening. Take the US, where the Federal Reserve has propped up the economy with its huge bond-buying program. And the inflation rate has stayed below the 2-percent threshold all the same.

And just because those critics don't have convincing arguments and enough clout in the Governing Council to form a majority, some of them are now resorting to other means.

Rumors about German Bundesbank President Jens Weidmann being cross with Draghi over the latter's "go-it-alone mentality" have been blown out of proportion by anonymous sources, who claimed a palace coup was in the making in the Governing Council.

Other sources cited Draghi's jadedness from holding office, claiming he'd rather become the Italian President instead of dealing with petty-minded critics of his monetary policy.

At Thursday's news conference Draghi hit back elegantly, insisting his monetary policy moves had been unanimously endorsed by all Governing Council members, including his plans to swell the ECB's balance sheets to 2012 levels, if need be. And he mentioned there was agreement the ECB might take further unconventional, but mandated, measures.

Stock market expert Konrad Busen

Stock market expert Konrad Busen says Draghi critics have no convincing arguments

Will this silence the critics? Perhaps not, as convictions weigh more than words. There are those who don't think the EU will be able to move towards closer integration. And there are those who don't see the need for a European monetary policy different from the one the German Bundesbank pursued in the 1970s. The same people will continue sniping from the sidelines: They will keep firing broadsides at Draghi and accuse him of being an Italian, although he favors an economic and financial stability, which plays into the hands of German supporters of stability.

The ECB is not the Bundesbank. The ECB's "subjects" live in widely differing economic environments. Other big central banks - like in the US and Japan - have pumped billions into their markets to support the economy and to devaluate their national currencies as an export-boosting side effect. The ECB can hardly be asked to ignore all that.

There's no doubt the ECB's task is to safeguard price stability, which it sees as protected, with the inflation rate being at 2 percent or slightly below. This goes to show that given the current low inflation rate, the ECB simply has to act - thus helping to curb record-high unemployment in the eurozone.

Mario Draghi and his colleagues in the Governing Council take their jobs seriously. There's no good in attacking Draghi and wishing back old Bundesbank times, since it doesn't benefit Europe and help build prosperity across the Continent.

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