Brussels (dpa) - The designated head of the European Central Bank (ECB), Christine Lagarde, does not want to lose sight of the effects of low interest rates in Europe. "We have to keep an eye on the negative consequences and side effects," the 63-year-old warned in the European Parliament in Brussels.
The worries of the people must be considered. At the same time, she made it clear that she felt that a very loose monetary policy was necessary for the foreseeable future, as the eurozone was exposed to economic risks while inflation was low. However, the decisions of the central bank will be better explained in the future. And the fight against climate change should also play a bigger role.
The EU leaders had nominated the former head of the International Monetary Fund (IMF) in July to succeed Mario Draghi at the head of the ECB. The official decision is due to fall in October after consultations with the European Parliament.
The central bank based in Frankfurt decides on the monetary policy for the euro zone and among other things determines the key interest rate, which is also important for savers and borrowers. The main objective of the ECB is price stability.
"I want people in the eurozone to understand our decisions," Lagarde continued at the hearing. Market and financial actors would follow the steps in detail anyway, but it would be important to communicate any short-term disadvantages and long-term benefits of decisions. "I'll spend a lot of time and energy on that."
The monetary authorities kept the key interest rate at the record low of zero percent in recent years. Banks receive fresh money from the central bank for free. Savings deposits but throw practically no interest. The central bank also upheld the 0.4 percent penalty interest that banks have to pay when they park money with the ECB. This is intended to prevent commercial banks from paying money to the central bank. Instead, the monetary authorities want to get the institutions to lend more to businesses and individuals. This should stimulate the economy and at the same time fuel inflation. The industry costs billions.
The central bank's measures have boosted Europe's economy since the financial crisis of 2013, which would otherwise be two percent smaller, Lagarde said. About 11 million new jobs were created. It acknowledges the core tasks of the ECB, but it must respond flexibly to future challenges.
These challenges included climate change and the emergence of digital currencies. One question is whether central banks themselves should issue digital currencies, said Lagarde. The US digital giant Facebook had triggered in recent months with the announcement of its digital currency Libra among politicians and central bankers restlessness. Libra is expected to be available to consumers in the coming year and will be available for purchase in US dollars or euros. Facebook founder Mark Zuckerberg sees the currency as an advantage, especially for cross-border credit transfers.
Regarding climate change, Lagarde said that climate risks must be placed at the center of financial stability. The development of green financial markets has not progressed far enough. This refers to investments and financial products that are in line with the 2015 Paris Climate Agreement.
The European Union has set itself the target of reducing its greenhouse gas emissions by 40% by 2030 compared to 1990 levels. According to estimates, around 180 billion euros would have to be invested in climate-friendly ways each year.
Fundamental criticism came from German bank chief Christian Sewing. "Central banks have little resources left to effectively cushion a real economic crisis," he said. "They have already turned the money on until the very end - above all the European Central Bank."
"Overall, another rate cut will be lost at the current level. It will only drive asset prices higher and further burden savers, "Sewing continued. The ECB interest rate policy already weighs heavily on the industry. "For us, Deutsche Bank alone, the negative deposit rates cost a high three-digit million amount this year. Extrapolated to four years, that's well over two billion euros. "
The CSU European politician Markus Ferber said: "Under Mario Draghi, the ECB has pursued an ultra-expansive monetary policy, which has brought little in the result, but has concealed many problems especially in southern Europe." The era of negative interest should find an end under Lagarde.
Draghi had set standards in the past eight years. The European Central Bank would do anything to save the euro ("Whatever it takes"), he declared around 2012, when the eurozone was on the brink. The ECB decided, if necessary, to buy sovereign debt from crisis countries indefinitely - a highly controversial program that was never used. "I hope I never have to say that," Lagarde said, looking at Draghi's words.
The European Parliament's Economic and Monetary Affairs Committee voted in favor of Lagarde on Wednesday evening, according to parliamentary circles. The plenum is also scheduled to vote in the coming weeks. However, this is of symbolic importance above all else, the decision ultimately lies with the EU heads of state and government.
Time series ECB interest rates
Entrance statement Lagarde
Eurostat on inflation in the euro area
EU Council on the ECB nomination process