Business World

Friday 25 May 2018

Schaeuble blames ECB rates for 'extraordinary problems'

Wolfgang Schauble
Wolfgang Schauble

Gernot Heller and Paul Carrel

The European Central Bank's record low interest rates are causing "extraordinary problems" for German banks and pensioners and risk undermining voters' support for European integration, Finance Minister Wolfgang Schaeuble told Reuters yesterday.

But the veteran minister said it would be wrong to blame the ECB entirely for this situation, stressing that central banks alone should not be relied on to restore economic growth and calling instead for Europe to press on with structural reforms.

Politicians from German Chancellor Angela Merkel's conservative camp, to which the finance minister belongs, have complained the ECB's ultra-low rates are creating a "gaping hole" in savers' finances and pensioners' retirement plans as returns have dropped.

Schaeuble suggested they risked fuelling the rise of euroscepticism in Germany, where voters flocked to the right-wing Alternative for Germany in state elections last month.

"It is undisputable that the policy of low interest rates is causing extraordinary problems for the banks and the whole financial sector in Germany," said the 73-year-old. "That also applies for retirement provisions.

"That is why I always point out that this does not necessarily strengthen citizens' readiness to trust in European integration," he added in an interview.

A storm of protest erupted in thrifty Germany after ECB President Mario Draghi last month described the idea of so-called helicopter money - sending money directly to citizens - as a "very interesting", if unexamined, concept.

Schaeuble, who said he stays in close contact with Draghi, said he would be amazed if the central bank was seriously considering such a policy. (Reuters)

Irish Independent

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