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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with monetary policy having replaced fiscal policy as the key policy tool to stimulate growth, might the old dogma be outdated?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.

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