Frankfurt / Main Bundesbank President Jens Weidmann declines Geldgeschenke for cranking the economy strictly. The idea of such public capital injections recently made under the keyword “helicopter money” sensation. “Instead of bringing ever more daring monetary experiments into play, it would be useful, even pause,” Weidmann told the newspapers the Funke Media Group (Saturday). “Monetary policy is not a panacea, not replace necessary reforms in each country and also does not solve the growth problems of Europe.”
Weidmann emphasized monetary gifts to the citizens were “a highly political decision”, would make governments and parliaments. “The central banks have to a mandate, not least because this is a massive redistribution would entail,” Weidmann said.
The President of the European Central Bank (ECB), Mario Draghi, was in the recent press conference on “helicopter money” addressed been. Draghi replied that they had not thought or talked about in the Central Bank, but also spoke of a “very interesting concept”, which was currently being discussed inter alia academic economists and also could mean “many different things”.
ECB decisions on March 10, 2016
Also, the chief economist at Berenberg Bank, Holger Schmieding, expressed negatively: “the” helicopter money “is nonsense,” Schmieding said in an interview the financial news agency dpa-AFX. it was not necessary Economically and politically it would thus create a dangerous precedent. “It would foster the illusion that the Fed could for citizens simply print more money and thereby solve the problems,” said Schmieding.
The “helicopter money” is considered as another possible means of ultra-loose monetary policy. The core idea: Instead of spending money to pump on the buying of securities in the market, is almost given away central bank money. Receiver could be for example the citizens or the state. Proponents see it as an advantage that the money would arrive on consumption directly into the economic cycle.
Also, ECB chief economist Peter Praet had at least not issued an unfavorable opinion. Theoretically, all central banks use this “extreme instrument,” Praet said in an interview published on Friday the Italian newspaper “La Repubblica”. It imagine only the question of whether and when the application actually makes sense
European Central Bank .: “Hu-Hu helicopter use”
Weidmann reiterated in an interview of the spark-Mediengruppe his critical attitude to the monetary policy of the ECB , The recent decisions were “very largely” and had not convinced him. “We continue to expect a strengthening of economic activity and prices. It threatens no deflation. “With deflation a dangerous downward spiral of declining prices and an economic downturn is meant.
Because the control is in the euro zone for some time under the ECB’s target of just under two percent, had the monetary authorities decided in Frankfurt just over a week an unprecedented package of measures: They lowered surprisingly the key interest rate from 0.05 percent to zero percent and increased the penalty to be paid is due if financial institutions to park money at the ECB. Finally, the ECB pumped more money into the economic cycle, by the monthly bond runs will be increased from previously 60 to 80 billion euros. All this should be rising faster rates in the euro area and boost sluggish in parts of the monetary union economy.
“But I have repeatedly pointed out that the effect of ultra-loose monetary policy is weaker, the longer it lasts” , Weidmann said. “At the same applies: the greater it is gas, the greater risks and side effects.”
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