Schaeuble Hails ECB Independence, Denies It's Spurring Populism

  • German Minister, Bundesbank chief hold joint press briefing
  • Weidmann says policy can be discussed, easy stance appropriate

German Finance Minister Wolfgang Schaeuble told Bundesbank President Jens Weidmann he’s a defender of the European Central Bank and its independence, qualifying earlier remarks that the institution shares responsibility for the rise of the anti-euro Alternative for Germany party.

Speaking to reporters in Washington on Friday, Schaeuble said the ECB is overburdened with tasks as it’s the only fully functioning institution in the euro area. Weidmann, who opposed several of the ECB’s stimulus measures in recent years including quantitative easing, responded that the ECB’s expansive policy stance was “appropriate.”

“I didn’t say that the monetary policy of the ECB is to blame for the emergence of the AfD,” as the party is referred to in Germany, Schaeuble said. “I pointed out that the feeling of insecurity among people who have to be concerned that there will be no or negative interest rates for a long time contributes to a bewilderment that we’re seeing in many election results.”

Schaeuble said last week that ECB President Mario Draghi’s policies hurt German savers and pensioners, and also contributed to the rise of the populist anti-immigrant AfD party. Weidmann said on Friday that while Germany’s economic situation differs from that of the euro area, the ECB must focus its efforts on the entire region and not individual countries.

“Of course, independence in monetary policy decisions doesn’t mean that those decisions are sacrosanct and can’t be discussed,” Weidmann said. “Monetary policy affects all citizens at a broad scale and it needs to withstand being the topic of public debate.”

Increasing Criticism

As it has embarked on bond purchases and negative rates in its bid to revive inflation in the euro area, the ECB has come under increasing criticism from Germany’s saving-oriented public.

Weidmann refused to draw a connection between policy decisions and party preferences in Germany “and even if I could, it wouldn’t be allowed to guide monetary policy.” The AfD has turned into a challenger for established parties after regional elections in March put them in three more state parliaments, complicating coalition-building. Germany holds national elections in September 2017.

Schaeuble will meet with Draghi this week in Washington. Central bankers and finance ministers are in the U.S. capital to attend the spring meetings of the International Monetary Fund and the World Bank.

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