Today the Podcast Podcast Economy
ECB: "Super Mario" Draghi hands over to Queen Christine
After eight years at the head of the European Central Bank, Mario Draghi hand over to Christine Lagarde. "Super Mario" goes away leaving behind many files and so many questions unanswered.
Unanswered questions and a big controversy that taints the end of his term. Adulated yesterday for saving the common currency, Mario Draghi is today challenged by his peers. In September, when the economy of the monetary zone began to emit signals of weakness, the guardian of the euro zone reactivated its accommodative policy to support the activity. It then lowers interest rates again and stimulates debt purchases. A decision made despite the opposition of a large part of the Board of Governors. Once again he practiced the fait accompli policy. An attitude mostly criticized on the merits. In the ECB's Governing Council, as well as outside, in the small milieu of former central bankers, voices are rising to publicly disapprove it.
► Why is this tool, which helped save the euro yesterday, today be called into question?
During his tenure, Mario Draghi bought for € 2.6 trillion in assets and this massive monetary intervention has collateral effects difficult to control. The fall in interest rates makes money almost free, much to the delight of the markets. Hence the formation of financial bubbles, especially in real estate. This could be the trigger for a new crisis, warn the more cautious.
Secondly, the low rates are good, but the negative rates as it is common today, including for the most indebted country of the euro zone, Greece, become penalizing for the banks, which do not earn bigger -thing. And especially for savers: they have to pay to save. Difficult to swallow for German or Dutch retirees and their representatives. The other consequence, even more disturbing of the negative rates, is to deprive the ECB of leeway to intervene in the event of a crisis. Because the main weapon of a central bank is to lower the rent of money, which can do today the Federal Reserve or the Bank of England, but the ECB.
► How will Christine Lagarde manage this bulky inheritance ?
No doubt doing Mario Draghi. She has already indicated that she fully adheres to the monetary policy of her predecessor, she also shares her convictions to get out. "Super Mario" repeats on all the tones that he did his job, but that the governors, they are the absent subscribers: " If you want to see interest rates go up, we must act on budgets. He said at his last press conference.
The Italian fervently hopes that states with budget margins will make a coordinated recovery at the level of the whole of Europe. Christine Lagarde is on the same line , she warned MEPs: " I'm not a fairy ". But it's a political beast. To facilitate exchanges she is even learning the German language. The former director of the IMF, praised for her ability to build consensus, will have to do all-out diplomacy to convince governments that it is urgent to take the reins.
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