Draghi’s Whatever It Takes Bid Saved Euro Area, ECB Says
European Central Bank President Mario Draghi helped save the euro with his pledge to do “whatever it takes” as lenders prepared for a collapse of the currency, an ECB lawyer told a hearing today.
The European Court of Justice, the bloc’s highest court, is weighing whether Draghi’s ECB overstepped its powers in 2012 with the promise to buy the debt of stressed countries if needed.
“The numerous cuts to key ECB interest rates made between late 2011 and July 2012 were having almost no effect on certain markets in the euro area,” Hans-Georg Kamann, a lawyer for the ECB told the EU court.
The Frankfurt-based ECB announced the details of its unprecedented bond-purchase plan in September 2012 as bets multiplied that the euro area would break apart and after Draghi’s promise to do whatever was needed to save the currency.
The ECB “is acting like a central committee,” German politician Peter Gauweiler said outside the hearing room. “The central committee has moved from Moscow to Frankfurt. It thinks it can rule over citizens’ money at will.”
“Someone who speaks like that hasn’t understood the importance of the central bank’s independence,” Schaeuble said at a ministerial meeting also in Luxembourg. It “isn’t ok” to degrade the ECB in speeches and Gauweiler’s comparison is “regrettable,” he said.
While the OMT program averted fears of a breakup of the currency region, it did little to help the euro area out of its malaise. Two years after its announcement, the ECB is gearing up to buy asset-backed securities and covered bonds to funnel credit to companies and households and fuel inflation in the now 18-nation currency bloc that’s running at a fraction of its target of just below 2 percent.
“There is no real suspense about the way the ruling will go, but there will be suspense about the actual content of the decision,” said Pierre-Henri Conac, a professor of financial-markets law at the University of Luxembourg.
Source: bloomberg- Draghi’s Whatever It Takes Bid Saved Euro Area, ECB Says
