Photo: World Economic Forum, Flickr
European Central Bank President Mario Draghi has been giving Germans a lot of facetime lately as he seeks to reassure them that the ECB’s new bond market intervention program, OMT, will not cause unwanted inflation.Last week, Draghi went before the German Bundestag to defend the policy.
Today, there is a long interview with Draghi in Der Spiegel allowing the central bank chief to do the same. The interviewers, Michael Sauga and Anna Seith, do a good job of voicing all of the typical German concerns in their questions. And the ECB president mostly reiterates many of the same defenses of OMT he’s given publicly before.
Draghi did make one interesting comment, though, explaining why he has a personal commitment to containing inflation.
Here is the exchange:
SPIEGEL: At the start of Monetary Union, Germans were promised that the ECB would behave like a second Bundesbank, the country’s central bank. Many people here now speak of a new Banca d’Italia, which tolerated double-figure inflation rates in the 1970s.
Draghi: I consider such accusations, to put it mildly, inelegant. For two reasons: in the 1970s, the Banca d’Italia was not independent. Today, the situation is completely different. But there is also a personal reason. Because of inflation, my family lost a large part of its savings at that time. You can therefore rest assured that I am personally and not only professionally committed to delivering price stability.
That was after Draghi had already addressed fears about Weimar, about which he said, “In some cases, such as in the Weimar Republic, printing money caused inflation. But in other cases, proactive central bank action did not.”