April 18, 2016 / 6:35 AM / 3 years ago

Next ECB president must be German, Merkel's Bavarian allies say

BERLIN (Reuters) - The next European Central Bank president should come from Germany, German conservative politicians said on Monday, ramping up pressure on what they see as too much free-spending by the ECB and not enough rigor.

Thorns of berry bushes are silhouetted to frame the new ECB headquarters in Frankfurt, Germany March 9, 2016. REUTERS/Kai Pfaffenbach

One said the current president, Italian Mario Draghi, had weakened the ECB’s reputation.

Such conservatives have complained loudly in recent weeks that the ECB’s ultra-low rates are creating a “gaping hole” in savers’ finances and pensioners’ retirement plans as returns have dropped.

Germany also has a long history of preferring strict fiscal and monetary policy.

Hans-Peter Friedrich, a leading lawmaker for the Christian Social Union (CSU) and former interior minister, told mass-selling daily Bild the policy of current ECB President Mario Draghi, an Italian, had “lead to a massive loss of credibility.

“The next ECB chief must be a German, who feels bound to the German Bundesbank’s tradition of monetary stability,” Friedrich added.

Hans-Peter Uhl, the CSU’s spokesman on interior affairs, called for a German financial specialist to head the central bank. Meanwhile, Markus Soeder, finance minister for the state of Bavaria, told the Bild am Sonntag paper it was time for a “change of direction” and more German influence.

A spokeswoman for the German Finance Ministry said the question of who will succeed Draghi was not relevant at present since he is not due to step down until November 2019.

Nonetheless, the fact that some lawmakers in Merkel’s coalition government are raising the topic now underscores how fraught relations between the euro zone’s biggest country and Draghi have become.

Mario Gruppe, an economist at Nord LB, described the latest comments as a new episode in a serial called “The Germans get annoyed about monetary policy”.

“It shows that unhappiness among German politicians about the ECB is increasing. And if there are no signs of change, the tone should get even louder,” he said.

However, Gruppe does not expect a serious debate about Draghi’s successor for another two years.


Early on in his term as president, Draghi was presented with a black-and-gold spiked helmet dating from 1871 by Bild to symbolize the newspaper’s confidence that the Italian boss would stick to Prussian-style discipline against inflation.

But relations with Europe’s biggest economy have soured as the central bank has unleashed round after round of monetary easing, including cutting its deposit rate into negative territory and expanding asset buys, in an effort to stimulate growth and stave off the threat of deflation.

A storm of protest erupted in thrifty Germany after Draghi last month described the idea of “helicopter money” - sending money directly to citizens - as a “very interesting” - if unexamined - concept.

Last week, Finance Minister Wolfgang Schaeuble said the ECB’s policy was causing “extraordinary problems” for banks and risks undermining support for European integration and reportedly blamed its policy.

The ECB itself is not immune to the criticism and Draghi recently bemoaned what he described as the “nein zu allem” (“no to everything”) approach - a swipe at Germany.

Reporting by Caroline Copley; Additional reporting by Frank Siebelt; Editing by Jeremy Gaunt

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