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Sunday, January 18, 2015
ECB chief Draghi want to open the floodgates even further, but the Bundesbank thinks this is a bad idea. In order to overcome the resistance of Germany, the central bankers in Berlin presented compromise proposals.
ECB chief Mario Draghi is apparently making an effort to address concerns of Germany against the expected program for large-scale purchase of government bonds of euro countries. There will always likely that the European Central Bank President make concessions to the Germans in order to appease the government and the population, reported the “Frankfurter Allgemeine Sunday newspaper” without naming specific sources. Let there be remembered that the national central banks in each case only bought the government bonds of their own country.
The “Mirror” reported consistently, Draghi has German Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble presented these considerations last Wednesday.
According to reports, the intended loss that may eventually incur 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 half
That would mean that the Bundesbank and thus the German taxpayer or liable only partially would have for the possible failure of Italian or French government bonds. , In Bundesbank circles reported to the effect that “FAS” 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.
According to the “mirror” Greece is not allowed to participate in the program. His government bonds would not meet the quality standards of the action.
Bundesbank remains critical
Draghi seems determined on the first monetary policy meeting of the monetary authorities to open this year, the floodgates quite far and providing banks with more liquidity. In preparation is a broad-based purchases of euro government bonds – in the jargon “quantitative easing” called (QE). Even if the Bundesbank refuses such unconventional step, Draghi is likely to have a majority in the Governing Council safely now
Draghi calculus behind this ultra-loose monetary policy after the US model. Next falling bond yields to banks to bring to reinvest in riskier products and to provide some more credits. The current sluggish economy in the euro zone would be boosted by – and rising inflation again. The risk of deflation – a Abwärtssogs from falling prices, weak consumption and declining investment – could be averted
In the euro zone, the cost of living had fallen by 0.2 percent in December for the first time in more than five years -. The inflation target of the ECB is far away. It provides price stability for almost two percentage reached.
More aboutThe Bundesbank is critical QE has long been compared to. She fears that it passes by the national parliaments to a redistribution of the tax payers risks. In addition, Bundesbank President Jens Weidmann fears 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.
Experts believe that talks to the specific form of the program will continue until the last minute. Because many technical issues need to be clarified, Draghi could only present a fundamental decision on Thursday if possible. The details would be worked out until the next Council meeting on March 5 in Cyprus.
Source: n-tv.de
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