- The ECB on Thursday expected to decide the purchase of government bonds to fuel inflation in the euro-zone
- Bundesbank chief Jens Weidmann is skeptical -. But the word of the Bundesbank in Europe is not as much weight as before.
By Andrea Rexer and Markus Zydra
It was in 1988, as conceived an expert group headed by the former Bundesbank President Karl Otto Poehl the structure of the future European Central Bank (ECB). Independently she must be, only the price stability obliged – and never allow governments to crutch for fundraising
Poehl knew that the Member States of the future euro zone would have tough years ahead. Austerity measures, market liberalization and stabilization of the own currency.
France fit this compulsion not to discipline. It called for a European Reserve Fund. The money should be used to support the franc during the transitional phase in an emergency. Pohl was adamant. He feared that as the pressure to conform is weakened to the debtor countries to “put its house in order.” Poehl and the Bundesbank were able to impose their rejection.
New Order
The acting president of the Bundesbank, Jens Weidmann told this episode, as part of the commemoration of the Bundesbank Poehl, who in December 2014, age had died of 85 years. Weidmann, the high esteem Poehl suggested in his speech to the bow today. “Now we are in the midst of a European debt crisis and the arguments on both sides, little has changed.”
The mood today likes a lot of resemblance to the have of that time, but the balance of power is different. For the Bundesbank, it has become much harder to enforce their beliefs. This fact should be especially clear on Thursday when the ECB shall make a decision to buy government bonds in the euro zone. This decision is considered probable. ECB President Mario Draghi want to prevent a dangerous deflation. Weidmann and a few other of the 25 colleagues in the Governing Council are against it. Their argument: Italy and other countries can still cheaper to borrow from the ECB action money, which the fumes austerity and reform tendency of governments
European Central Bank A bank with limited freedom
The European Central Bank uses its independence differently than the Germans had imagined. But what should the bank that can so extreme affect the lives of citizens with their decisions?
Also Bundeskanzerlin Angela Merkel is worried about the political impact of such a measure. “The pressure on the improvement of competitiveness in Europe must be maintained, otherwise nothing, absolutely nothing to help us is,” she said on Monday evening at the New Year reception of Deutsche Börse.
problem started with financial and Debt Crisis
Weidmann has said that the Bundesbank was the largest and most important central bank in the euro system. That may be true. But their power in the European network has shrunk in the wake of the financial crisis. Of course, this loss of power was already evident with the task of the D-Mark in 1999. At that time, the ECB began its work. This political stroke of the pen establishing the European Monetary Union was a “culture shock” for the Bundesbank as the one who was there at the time remembers. Suddenly, you should only be in the ECB’s “one of many”. The German bankers wanted to use their voice to to enforce the traditional stability thinking of the Bundesbank in the Governing Council. The philosophy of the Bundesbank, it saw the Germans should be the blueprint for the future work of the ECB
Before the financial crisis was still working. National egoism were suppressed in the Council, they usually do not come on. Quite the contrary. Narrated is an episode from the ECB presidency of Wim Duisenberg. The Governing Council wanted to cut interest rates for the euro zone. As reported, a central banker said, “For our country, it would be better to increase the interest rate, but since our body is responsible for monetary policy throughout the euro area, I agree with the decision to cut interest rates to.”
As long as it was about classical monetary policy, that is the question yes or no interest rate cut, the dissent was manageable. The problem began with the outbreak of the global financial crisis and the subsequent Euro Debt Crisis: The ECB made decisions, the national banking systems favored and borrowing of states facilitated. The supreme body of the ECB acts since 2009 politicized. The Bundesbank lost in this process, the policy-making, from now on she tried to prevent “the worst”.
Axel Weber, the predecessor of Weidmann as Federal Reserve chairman, resigned in 2011 in protest. Jürgen Stark, former chief economist of the ECB, followed a few months later. Weidmann goes into the clinch and know many German behind. But in the big decisions makes Draghi with a comfortable majority of what he thinks is right.
“Jens Weidmann is doomed to preach stability. The Bundesbank will always occur with a raised finger. Europe needs such Bundesbank also, as a last resort, “says David Marsh, who traces the history of the Federal Bank for decades. “The old Bundesbank is no longer there. The people of today have no nostalgic feelings, this is a new generation. But the spirit is not extinguished,” says the former British journalist.
The Bundesbank is a myth , In the memory of many German is the institution until today for the stability of the D-Mark. Germany developed from the 1950s to the international economic giant and yet remained a political dwarf. The Germans may have been unpopular abroad, but the D-mark was sought. This gave confidence. “Not all Germans believe in God, but all of the Bundesbank,” said Jacques Delors, President of the European Commission in 1992. ‘/ P> The weak euro is not necessarily bad for Germany. Even the ECB promotes development. Just the ailing euro countries could help the weak euro. But more is needed to end the crisis.
European Central Bank cheap euro helps Europe
The Bundesbank is not alone with their fear of loss of meaning. All national banks are fighting for their sinecures. Many tasks which previously has held every national bank will now be bundled into focus, then takes a central bank the work of all. And who can do something about it being fought staunchly behind the scenes.
ECB wears the trousers
has When the French central bank governor Christian Noyer last fall, voted against the ECB’s decision, buy securitized loans (ABSs), so he did not on principle. “He had no problem with the ABS program as such, but he did not know why the ECB makes center, but that the French must implement it,” says someone who was at the meeting here.
The ECB has also in the field of banking supervision now on the pants. It monitors the most important institutions in Europe. This had consequences for the Bundesbank. In daily operations with the ECB, Financial BaFin has the supremacy. This has so decided, the Bundestag. Bundesbank and BaFin are no longer equal.
“Weidmann is offended that the Bundesbank now only plays second fiddle in banking supervision,” says one who knows him well. Bundesbank board member Andreas Dombret asked myself recently publicly, “the role of the Bundesbank actually in the new regulatory structure” engaging and lamented the loss of a “piece of influence” in banking supervision.
Federal Bank expert Marsh refers to the ratio of Draghi and Weidmann as “symbiosis”. Weidmann was Draghi’s counter-argument, when the floodgates politicians still wanted much more open. “If Draghi sober think about it, he sees that Weidmann has more right than wrong.”
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