Today’s decision extends the ECB’s emergency bond purchase program until mid-2021 and has increased it from € 600 billion to € 1.35 billion, which should allow the bank to buy most of the new debt that eurozone governments are issuing to overcome the pandemic. This decision aims to mitigate the impact of the pandemic on the member countries of the Monetary Union, in particular Spain and Italy, the President of the ECB Christine Lagarde affirming that the decision was taken in the context of the eurozone experiencing an “unprecedented contraction”.
Referring to last month’s decision by a German federal court in Karlsruhe ordering the ECB to justify its bond buying program or to lose the German Bundesbank as a participant, Henkel said: “Instead to react to the verdict of the German Constitutional Court, the ECB decided to do the same thing as before, doing more of the same thing, much more.
“For years, the ECB has injected huge amounts of euros into the financial markets in an attempt to reach” an inflation rate close to but below 2% “.
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The ECB’s approach will only exacerbate the problems of the euro area, said Hans-Olaf Henkel
Hans-Olaf Henkel, former MEP
The ECB acts like a doctor prescribing a certain drug and, after realizing that it does not work, rather than changing the treatment, constantly increasing the dose
“It’s grotesque. Aside from the fact that before the euro, the role of a central bank was to control inflation, not increase it, the ECB never achieved this goal.
“As a result, the ECB acts as a doctor prescribing a certain drug and, after realizing that it does not work, rather than changing the treatment, constantly increasing the dose. “
Referring to comments by US President Donald Trump on treating coronavirus with bleach, Henkel said: “In the Corona crisis, the ECB acts like President Trump.
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Christine Lagarde, President of the European Central Bank
“While Trump has suggested considering injecting disinfectants with Corona patients, the ECB is still throwing more money at him.
“Both of them hurt the patient. The two ignore the true causes of the patient’s illness. “
In Mr. Trump’s case, Henkel said, there were at least experts willing to disagree – for example, adviser Dr. Anthony Fauci, director of the National Institute of Allergies and Infectious Diseases.
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Henkel compared ECB’s approach to US President Donald Trump’s laundering suggestion
Henkel added: “But the ECB’s actions are widely applauded, mainly by those who benefit from short-term effects like stock market participants and politicians who like to spend money on their constituents.
“The ECB needs a Dr Fauci to tell them that the problem is the euro itself: it is far too weak for German, Austrian, Dutch, Danish and Swedish industry, too strong for Italy, Spain and Greece ”.
Having a “one size fits all” currency for different economic environments was like having a “one size fits all shirt,” said Henkel.
He explained: “For some, it is too cowardly, like the countries of the north, others cannot enter it, like the south, when it could really be suitable for only one: France.
In the end, the ECB simply piled up problems further, warned Henkel.
He said: “With today’s announcements, the ECB indirectly supports the budgets of southern euro area states, helps avoid necessary reforms in these countries and weakens the competitiveness of the entire area euro.
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“While Mrs Lagarde’s latest decisions are justified as an emergency reaction to the corona crisis, let us not forget that they are nothing more than a continuation of the ECB policy started under Mario Draghi.
“When he started opening the doors to the flood of money, there was no other dangerous virus than the virus of political convenience. “
“The eurozone has not reformed, it has lost productivity and, by the way, it has dragged the world into economic growth rates for many years, long before Corona.