The growing public criticism of the zero interest rate policy of the European Central Bank (ECB) from Germany drives also Finance Minister Wolfgang Schäuble (CDU) to. At the meeting of finance ministers and central bankers of the 20 most important industrialized and emerging countries (G20) later this week in Washington Schäuble wants to advertise for an exit from the extremely loose monetary policy. That said Schäuble at a meeting of the Market Economy Foundation in his honor. He had just phoned the US Treasury Jack Lew and told him: “. You should the Federal encourage reserve, and we encourage the European Central Bank and the Bank of England, with the Americans in the convoy, but go out slowly,” One must in drug addicts gently go out.
According to Schäuble’s view, the Americans are now “highly concerned” about the volatility in financial markets, which is caused by the extremely loose interest rate policy of the major central banks. The realization is growing that the “excess liquidity more cause than solving the problem now” is. In defense of the economic mainstream, which supports such a policy, but there is only the argument that the exit from the low interest rate policy even harder going than the retention.
Higher interest rates rather than low
Schäuble would have also required, “that the Fed would have had a little more courage with the withdrawal from the extraordinary monetary policy”. The US Federal Reserve has, after long hesitation with a small increase in interest rates initiated the turn several months ago. Further steps slow in coming but.
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Looking at the German accusations against ECB and its President Mario Draghi, he warned, the ECB’s independence is a valuable asset. He did not defend Draghi. But “if we now make the mistake of attacking the independence of the ECB in Germany, the damage would be greater than the benefits,” said the Minister, from the Group also displeasure is loud. The Germans had taken place for the ECB’s independence. “Then one must also accept their decisions if they do not like one. Asking the independence of the ECB in question, I do not consider wise. “He pointed out that the inflation target of” below but close to 2 percent “that the ECB failed for three years, enforced by their erstwhile German chief economist Otmar Issing was.
Although the low interest rates budgetary relief strongly and decisively contribute to the Treasury this legislature probably have to make any new debts, assured Schäuble, it had higher interest rates rather than low. His main focus is emanating from lack of interest disincentives for private provision. From this perspective applies: “3 percent interest rate at 3 percent inflation is not the same as 0 percent interest rate at 0 percent inflation.” Schäuble also drew a line from the low interest rate policy of the ECB to the strengthening of the AFD. He did Draghi said he could be “proud” – half of their election result he could ascribe to the interpretation of its monetary policy
settlement of banking supervision in the euro countries
Draghi now has talks with Schäuble. to discuss how the attacks had to encounter. The attacks from the insurance industry and the savings banks has now connected to the private banks, the incoming President of the Banking Association, Hans-Walter Peters. He told the Frankfurter Allgemeine Sonntagszeitung, the negative interest punishing banks that hold high liquidity reserves. “That would be healthy in and of itself. To that extent the stability of the financial system is threatened by the ECB. “Schäuble said he was with Draghi appointment this week,” to think about how to counteract the criticism of the ECB in Germany “. In his opinion, the low rates could be only a temporary phenomenon.
Very skeptical, the Minister also expressed about the settlement of banking supervision in the euro countries in the ECB. This is because of potential conflicts of interest between monetary policy and supervision of “highly problematic”. “I see, Chinese Walls’ not between banking supervision and ECB,” Schaeuble said. But all other solutions would have required a unanimous amendment of the EU Treaties.
“I am not the dictator of the federal government.”
Schäuble was in Kronberg with the tungsten Angel Price private market economy Foundation Award for his contribution to the consolidation of public finances and his efforts to preserve the principle of liability in the euro area. The new president of the Ifo Institute, Clemens Fuest, Schäuble praised as “a convinced European who is also willing to stand up and to become unpopular with friends and partners”. Despite some progress, for example, with the banking union, the governance of the euro area is problematic. The debt supervision in Brussels “is rather an exchange of views as a control,” criticized Fuest.
The Freiburger economist Lars field called Schäuble to “regulatory anchor in the Cabinet”. The Promised had indeed intimated how limited his influence in the coalition. Decisions are increasingly made solely by the party chairman. So he was opposed to the call premium for electric cars. Here turn him to the stomach. “What kind of people are in the car industry?” Asked the minister angrily. On the reluctance to buy electric cars a premium will not change anything. “The business advocacy is not a glorious chapter in the regulatory policy,” he wrote to the assembled entrepreneurs, economists and bankers in the album. But as Minister put it only a certain time with his party leader to. Sometimes he was indeed surprised at what he strip himself, the minister said with a wink. But: “I am not the dictator of the federal government.”
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