Ahead of the disruptive debate towards pumping money into the euro zone economy, the European Central Bank tries to pacify relations with Germany after the tremendous criticism from Berlin.
Wolfgang Schaeuble, the German Finance Minister reportedly pointed fingers in the cheap-monetary policy of ECB last week as part of the raising of the country’s right-wing anti-immigration Alternative for Germany.
It appears that the discussion would continue after Mario Draghi, the ECB President and Schaeuble have met at a gathering of central bankers and ministers from around the world in Washington this week.
Activists vented out in thrifty Germany after Draghi has described the concept of “helicopter money” last month as a “very interesting” knowledge, an idea that sends money directly to citizens.
Subsequently, the top talents of the ECB, along with the bank’s chief economist and vice president, retreated, saying the concept was not on the table, but the damage is already done.
An economist at Commerzbank Joerg Kraemer said, "The ECBs policy was already unpopular in Germany and the idea of helicopter money was the straw that broke the camels back,"
"People feel that ideas like this are dangerous."
However, German analysts perceive the concept as an excessive ramping up of a loose money policy that fuels the rallying property prices in their country, as well as it would weaken the euro when money were printed and gave it away for free.
The ECB’s stance was criticized by many German politicians, and one minister is putting the blame on low interest rates for setting a “gaping hole” in pensions, as a hearsay of a potential legal action towards the helicopter money.
NO TO EVERYTHING
It strikes a new low in the often troubled relations between the euro zone’s largest country and the Italian chief of the central bank, who has lamented what he defined as the "nein zu allem" ("no to everything") approach, which was a critical remark at Germany.
It was reported that the discussion of the broadest possible ECB action, irritated a few governors at the euro zone central bank as the ECB’s 1.7-trillion-euro-plus money printing scheme was distracted.
For several years, the ECB has been pressured in improving its image with a skeptical German public and refrained from giving comments.
However, many at the ECB dislike what they notice as unrelenting criticism from politicians of Germany, as well as journalist and economists, who turned down the generous measures the ECB is experiencing to fight up the sluggish economy.
The ECB’s chief economist Peter Praet said at a conference, "I think this shooting at the institution, especially in this country, is sometimes difficult to swallow,"
Meanwhile, it appears that there is a slight potential of the failing debate over a meeting of the 19 euro zone central bank governors on April 20-21. It was described by a spokesman for the finance ministry of Schaeuble as a "legitimate discussion".
Elsewhere, a few expected that the concept of giving away money directly to Europeans could lead to gatherings.
"It will be hard to get the idea of helicopter money out of peoples heads," a euro zone official said.
Kraemer at Commerzbank said, "The criticism in Germany is justified but a little dishonest,"
"There is no way Schaeuble would be balancing his books were it not for the ECBs policy."
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