COPENHAGEN: European Central Bank (ECB) executive board member Benoit Coeure, at a meeting of eurozone finance chiefs, defended the bank’s monetary policy on Friday against criticism from German politicians pointing at the bank’s negative deposit rate and the mass purchase of bonds through its quantitative easing program.
When the bank’s governing council met on Thursday, the council unanimously defended the appropriateness of the current expansionary monetary policy, said the French economist at a press conference.
“We all have difficult work to do. The ministers have hard work to do. We have hard work to do. We have different responsibilities,” he added, stressing that the bank’s best contribution to the eurozone would be to deliver on what the treaty establishing it says.
In March, ECB unveiled a series of unconventional monetary policies designed to lift inflation closer to its two percent target. Anti-deflation measures already in place include the monthly purchase of 80 billion euros (89.88 billion U.S. dollars) in bonds. The policy has been criticized by German politicians since the beginning.
Earlier this week, German finance minister Wolfgang Schauble said record low rates were causing extraordinary problems for German banks and pensioners and risked fuelling the rise of Eurosceptics in Germany. He suggested that the ultra-low rates were partly responsible for the rise of the xenophobic party Alternative for Germany.
Emphasizing the bank’s right to independence from political interference, eurozone finance chief Jeroen Dijsselbloem called on eurozone politicians to refrain from commenting on ECB’s work. “ECB needs to do its work in full independence. It is important for its credibility and the effectiveness of its policies.”
Concerning Greece, Coeure said the ECB agreed that “debt measures for Greece are necessary to ensure debt sustainability” and the bank would provide technical assistance on debt relief measures for Greece. He also noted that Greece had made progress on tackling the problem of non-performing loans during the current bailout negotiations.
