Skip to main content

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated Cookie policy, Privacy policy and Terms & Conditions

kotz5_DanielVineGarcia_GettyImages Daniel Vine Garcia/GettyImages

Mario Draghi and Germany’s Fiscal Fetish

The European Central Bank is under sustained political attack from Germany, a country that has long prided itself on defending the principle of central-bank independence. But, with monetary policy having replaced fiscal policy as the key policy tool to stimulate growth, might the old dogma be outdated?

FRANKFURT – The European Central Bank is under heavy attack in Germany, a country that has long prided itself on defending the principle of central-bank independence. Indeed, it was Germany that pushed for this principle’s inclusion among the criteria set out in the Maastricht Treaty, which established the conditions for membership in Europe’s monetary union.

For many EMU members, making their central banks independent in order to join the euro meant a change in political regime. For example, in France’s 1992 referendum to ratify the Maastricht Treaty, the prospective autonomy of the French central bank was one of the strongest points in the campaign against adopting the euro.

By contrast, in today’s Germany, putting pressure on the central bank has become standard practice. For a couple of months now, even Finance Minister Wolfgang Schäuble has been commenting regularly on the ECB’s monetary policy.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.

https://prosyn.org/xM2RuJh;

Handpicked to read next

  1. haass107_JUNG YEON-JEAFP via Getty Images_northkoreanuclearmissile Jung Yeon-Je/AFP via Getty Images

    The Coming Nuclear Crises

    Richard N. Haass

    We are entering a new and dangerous period in which nuclear competition or even use of nuclear weapons could again become the greatest threat to global stability. Less certain is whether today’s leaders are up to meeting this emerging challenge.

    0