The monetary policy of the central bank is currently causing a lot of criticism in Italy.
(Photo: dpa)
The European Central Bank (ECB) is currently facing massive criticism in Italy. Defense Minister Guido Crosetto was not alone in expressing skepticism about the latest interest rate hike in December. Deputy Prime Minister Matteo Salvini even claimed that the ECB’s decision was “burning billions of euros in savings in Italy and across Europe”.
The attacks are skewed for several reasons. The reason behind this is apparently the calculus of making the central bank the scapegoat for self-inflicted problems. Which, by the way, has happened again and again in Germany in the past.
The allegations are also strange because the ECB has left no stone unturned to ensure Italy’s financing capability. In doing so, she has broadened her mandate.
The best example is the TPI crisis program, which allows it to buy unlimited amounts of individual country bonds in an emergency. Ultimately, this means a politicization of the ECB.
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From the point of view of many experts, this program is mainly aimed at Italy. The announcement of the TPI last summer alone caused yields on Italian government bonds to fall again significantly. If Italian politicians now put even more pressure on the central bank, that could reduce the willingness to provide such help.
“Baning the ECB to blame for one’s own problems is not an Italian phenomenon”
The comments are also undermining investor confidence. One gets the impression that Italy is having major difficulties with financing. The starting position there is not that bad. For example, the government has large funds available from the EU’s Corona reconstruction fund.
Italy has also used the long period of low interest rates to take out long-term debt on good terms. Higher capital market interest rates therefore only have a gradual impact on debt servicing. Such arguments, however, quickly slip out of sight when politicians focus on criticizing high interest rates.
>> Read here: Italy’s Defense Minister Attacks the ECB Again – What’s Behind Crosetto’s Attacks?
But the truth is that trying to blame the ECB for one’s own problems is not just an Italian phenomenon. German politicians have also tried to do this again and again in the past. Former Finance Minister Wolfgang Schäuble, for example, blamed the ECB and its former boss Mario Draghi for the strengthening of the AfD.
The danger with such diversionary maneuvers is that the real problems are ignored instead of solved.
More: The dispute over interest rates and inflation has shifted the balance of power in the ECB and weakened Lagarde