5 November 2018

Italy shouldn’t jeopardise the credibility of the euro

  • ECB must exit crisis mode quickly and decisively
  • European institutions shouldn’t allow themselves to be dictated to by Italy

Hans-Walter Peters, president of the Association of German Banks, calls for a quick and firm change of course by the ECB. “Let me say quite clearly: the European Central Bank must end its monetary policy excesses – and it must do so faster and more decisively than indicated to date,” Mr Peters said when the Association’s board of directors met in Frankfurt today. He stressed that the net purchases of bonds should definitely be terminated at the end of the year. It was unfortunate that the ECB was still leaving the door open to an extension of the programme, and the ECB’s negative deposit rate was an anachronism.

Mr Peters also called on the ECB not to allow its decisions to be dictated by current developments in Italy. “Should the ECB take the increased capital market rates there as grounds for postponing a change of course in monetary policy, it would harm its own credibility and do a disservice to monetary union. Italy shouldn’t be an excuse for sticking to an extremely expansive monetary policy,” he said.

There would be no change in the general economic development in the eurozone because of Italy. At the same time, Rome shouldn’t be allowed to hamper further progress in banking union and the reform of monetary union. Any country so blatantly ignoring European rules and abusing the trust of its partners was flying in the face of the spirit of solidarity in the EU and undermining the search for European solutions to key challenges, Mr Peters added. Should the Italian government refuse to budge, the Commission should nevertheless pursue its present course calmly but firmly. “The credibility of the European rulebook is at stake and, along with it, the credibility of our common currency.”

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