Is the ECB's quantitative easing effective?
The European Central Bank has decided to leave the benchmark interest rate at zero percent, but contrary to expectations it is not extending its bond-buying programme for the time being. Some commentators criticise the bank's quantitative easing programme, pointing to the negative impact on savers. Others praise the ECB for curbing the banks' greed and pushing states to introduce reforms.
Powerful central bank spreading fear
Tagesspiegel remains sceptical about the ECB's decision to leave the benchmark interest rates unchanged again:
“With its financial conjuring tricks the ECB has turned the financial world upside down. Did you hear of anything like it? People having to spend money to lend someone else money? But that's what's happening right now. Finance Minister Wolfgang Schäuble is earning money with his government bonds because investors are willing to accept even negative returns for lack of better alternatives. The wealthy and the companies are paying penalty interest for leaving their capital in savings accounts. Saving is being punished. … The central bank is autonomous and independent. That makes the ECB one of the most powerful institutions in Europe. On Thursday it refrained from another demonstration of power - for the time being. If necessary, Draghi providently announced, it would use all the means at its disposal later on. That's frightening.”
ECB rebuffs greedy banks
The Central Bank has withstood the pressure of investors and banks hoping for further easing, L'Echo writes, disagreeing with other analyses:
“So the ECB does not plan to be more generous. But neither does it plan to change its current policy, even if it hurts the banks. Recently several bankers complained about the weak interest rates which they say are causing their profits to drop. Mario Draghi put them in their place: he pointed out that if profits dropped this year it's because they were unusually high in 2015 - thanks to the ECB's monetary policy. ... Investors and bankers must learn to be patient. The ECB, for its part, already possesses that virtue.”
Draghi's wise decisions
The business daily Naftemporiki also sees the ECB's course as correct:
“Mario Draghi contradicted those who had hoped that [the bond buying programme] would at least be extended until the end of 2017 by saying that he doesn't see the need for additional measures to prop up the single currency. For Draghi, patience is one of the most important virtues. … In these times of growing economic and geopolitical challenges the last thing the ECB president needs is another confrontation with the conservatives at the central bank or a clash with the president of Germany's Bundesbank. … At this critical moment the ECB chief has realised that he has no choice but to 'blackmail' the governments with his wait-and-see stance so that they engage more dynamically in the battle to boost their country's economy.”
Italy should make most of period of grace
Rome must not let the ECB's lax monetary policy lull it into inaction, La Stampa warns:
“As long as Mario Draghi continues to buy government bonds Italy can sleep at night. The question is what will happen when he stops. When Draghi announces that the time for incentives is over and Rome is left without the ECB's protective shield. When managing the gigantic state debts swallows up thousands of billions more. … The government must use this period of grace to boost growth with genuine (and expensive) reforms aimed at fortifying the structure of an Italy that has a wealth of talent. And the reforms must endeavour to remove the obstacles that are blocking Italy's development. This time must be used to lower public debt. … This is done by creating growth.”