Mario Draghi wants the Germans calm: he has the Chancellor his ideas already presented. (Archive)
The European Central Bank is getting ready to adopt a program for large-scale purchase of government bonds of euro countries next Thursday. But because the fear is big in Germany, to be held liable for any failure of other countries, ECB President Mario Draghi is apparently willing to make concessions to the Germans. According to information from the Frankfurter Allgemeine Zeitung, it is thought that the national central banks in each case only buy the government bonds of their own country: the Bundesbank so only Bunds, the Banca d’Italia only Italian government bonds. In addition to losses that may arise at some point those purchases, not, as is usually divided between the central banks of all countries. Rather, each central bank should be liable for the risks of their country alone – at least for the half. This would mean that the Bundesbank and thus the German ta xpayers not or only partially liable for the possible failure of Italian or French government bonds would have.
The Bundesbank President Jens Weidmann is hardly swayed by this proposal Draghi. In Bundesbank sources say that excluding the loss-sharing would eliminate only one of many problems: that of the common liability for any loss. But there was more fundamental objections to the purchase of government bonds, namely with regard to necessity, effectiveness and risk. Bundesbank President Jens Weidmann had in the past – opposition to government bond purchases by the ECB – also because of possible liability risks. He criticized that the ECB should not e ngage in a prohibited state funding through the printing press. He also feared that extensive purchases of government bonds for high-debt countries could be understood as a hedge against a possible bankruptcy. The zeal for reform in the countries would thus slowed down.
The resistance in the CDU could Draghi with his plan but perhaps soften. When Angela Merkel and Wolfgang Schäuble Draghi has already auditioned last Wednesday. They are silent so far about the plans of the ECB. Other CDU politicians show up appeased: “If the other central banks want to buy risky securities without Germany liable for it, then they should do that,” said CDU Group Vice Michael Fuchs Sunday newspaper. He added, however: “It makes sense, t he program will not result.”
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Read more in the Sunday newspaper from 01.18.2015. On the eve already in the FAS app and e-paper.
On the other true Draghi has also been critical loss leader Dutch central bank chief Klaas Knot. If the national central banks can only buy the papers of their own country, this space “a substantial objection” from, he said in an interview with the news magazine “Der Spiegel”. The risk is low then it will come to an undesirable redistribution of financial risks.
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The decision on the bond purchase program falls on Thursday. ECB chief Draghi has already pushed the door wide and emphasizes the central bank now had to resort to extraordinary measures because of the extremely low interest rate of 0.05 percent. Even if the Bundesbank continues to reject the program, Draghi should now have a majority in the Governing Council safely.
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