In break with tradition, Germany's new ECB appointee defends easy policy
Reuters
Published Feb 11, 2020 01:09PM ET
In break with tradition, Germany's new ECB appointee defends easy policy
FRANKFURT (Reuters) - Germany's new appointee to the European Central Bank's board, Isabel Schnabel, defended the ECB's easy-money policy on Tuesday, saying that the euro zone would be been worse off without it and it was up to others to counter the side effects.
Her words marked a departure from German central bankers' long-held scepticism toward the ECB's ultra-aggressive stimulus policy of sub-zero rates and massive bond purchases, which has caused two of her predecessors to resign in recent years.
"In the absence of these monetary policy measures, the euro area's development would have been much weaker," Schnabel told an audience in Karlsruhe, Germany. "A fundamental departure from (current ECB) policy does not seem appropriate."
Schnabel has pledged to fight anti-ECB sentiment in her home country since she joined its Executive Board on Jan. 1, replacing Sabine Lautenschlaeger, who had resigned after disagreeing with the latest ECB rate cut and bond purchases.
Jens Weidmann, the head of Germany's Bundesbank, once testified against one ECB bond-buying scheme before Germany's top court.
Schnabel stigmatized "claims and accusations that have no basis" and sought to pick apart the argument that the central bank is expropriating German savers while fuelling bubbles in stocks and property.
One of her arguments was that property prices in Europe's largest economy were at around the same level that they had been in 1990, once they were adjusted for inflation.
What's more, she argued, it was "primarily up to other policymakers", from governments to financial watchdogs, to tackle the side effects of the ECB's policy on the distribution of wealth and on financial stability.
"Distributional issues lie in the remit of fiscal and social welfare policy," she said. "And containing risks in the financial system is a task for financial market regulators and supervisors."
She conceded, however, that rate-setters should also weigh the pros and cons of their actions, and said the ECB would tackle the topic as part of a review of its strategy this year.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.