VIENNA (Reuters) - The European Central Bank needs an “intense discussion” among policymakers on key decisions if it is to avoid pitfalls such as giving the impression that it is bankrolling governments, the head of the Germany’s Bundesbank said on Tuesday.
Jens Weidmann was one of just over a third of the 25 members of the ECB’s Governing Council who last month opposed a decision to resume a 2.6 trillion euro bond-buying programme, designed to boost inflation in the euro zone.
He reaffirmed his opposition on Tuesday to relaxing the terms of the quantitative easing (QE) programme to allow the ECB to buy even more government debt.
“The fact that far-reaching measures such as government bond purchases lead to an intensive discussion is not only normal, but imperative in my view,” Weidmann told an audience at Austria’s national central bank.
The unprecedented backlash against the revival of QE just nine months after the ECB ended the scheme saw some national central bank governors take the unusual step of making their opposition to an ECB policy decision public. It culminated in the resignation from the ECB last week of board member Sabine Lautenschlaeger, also a German and a policy hawk.
That implies a fractious end to Mario Draghi’s eight-year tenure as ECB President and threatens to complicate the succession of Christine Lagarde on Nov 1. Draghi’s last policy meeting is on Oct. 24.
Weidmann regretted Lautenschlaeger’s resignation, saying her voice had enriched the ECB’s Governing Council.
“The diversity of opinions and perspectives has always been the strength of this body, not a weakness,” Weidmann said.
He defended self-imposed rules dictating that the ECB buy government bonds according to the size of each country’s economy and which bar it from owning more than a third of any one jurisdiction’s debt.
The ECB has promised to keep buying bonds indefinitely until inflation heads back to its target of just under 2% but it is set to hit a cap in Germany next year, according to analysts.
“I hope that the decisions that have now been taken will not lead to these restrictions being called into question,” Weidmann said.
“Particularly in a monetary union with fiscal autonomy for the Member States, it is important to ensure that the dividing line between monetary and fiscal policy does not blur.”
Writing By Francesco Canepa; Editing by Catherine Evans
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