Germany continues to resist implementation of the Outright Monetary Transactions bond-buying program even though it is already benefiting German banks. The Bundesbank says the program would result in a dangerous mix of monetary and fiscal policy that fuels inflation.
This Website Is For Financial Professionals Only
European Central Bank (ECB) president Mario Draghi defended the move, saying the greatest threat to stability in the Eurozone was not action, but inaction.
Germany’s chancellor and finance minister support the plan, countering public backlash that the program had compromised the bank’s ability to ensure price stability.
Draghi counters that the plan levels the playing field for German companies and strengthens its industrial sector. Just the announcement of the plan has already helped
financial markets by improving sentiment.
Draghi has committed to clearer explanations of ECB actions to the German parliament in an effort to shore up support.
The effectiveness of the program will be felt worldwide since Europe’s troubles have already rippled into other economies like China and the US.