Several lawmakers in Angela Merkel’s coalition are demanding radical reform of the European Central Bank’s voting structure to strengthen Germany’s influence, highlighting worries in Europe’s biggest economy about the bank’s bond-buying plans.
Many Germans are becoming increasingly uneasy about the direction of the ECB under President Mario Draghi, especially after his announcement that the bank may start buying government debt to reduce crippling Spanish and Italian borrowing costs.
Fed up with bailing out euro zone states, some Germans fear a new ECB bond-buying program would amount to the financing of governments – something the bank is not supposed to do. They also argue it would ease pressure on governments to cut debt.
“We need a new alignment of voting weights in the ECB’s decision-making committees according to the proportion of liability (a country takes on),” conservative lawmaker and euroskeptic Klaus-Peter Willsch was quoted as saying by Handelsblatt on Thursday.
“As the main creditor, Germany must get a veto right in all questions,” he said, adding that Mr. Draghi had strayed from his mandate of securing monetary stability.
Mr. Willsch is a well-known rebel in Ms. Merkel’s centre-right coalition and one of the most vocal critics of bailouts. He has lodged several complaints with Germany’s Constitutional Court.
“Under Draghi, the ECB is mutating into a state financier and a ‘bad bank’ against European constitutional law,” said Mr. Willsch.
It is highly unlikely that the ECB will change its operating rules and Ms. Merkel has given the nod to the bank’s bond-buying plans and made clear she is not concerned about any potential threat to the ECB’s independence.
Mr. Draghi tried to offer some reassurance to critics of the bond-buying plans this month by saying any intervention would only come if governments requested aid. That effectively attaches some conditionality to debt purchases.
But there is still plenty of resistance in Germany, the euro zone’s paymaster which has already guaranteed some €310-billion in bailouts. Bundesbank chief Jens Weidmann is the voice of opposition within the ECB, although he looks isolated there.
Resentment that Italy, viewed by many Germans as fiscally irresponsible, was ever allowed to join the euro runs deep in Germany and privately some politicians in Berlin accuse Mr. Draghi, who is Italian, of running an “Italian central bank.”
Free Democrat (FDP) Frank Schaeffler, another vocal dissenter in Ms. Merkel’s centre-right coalition, also bemoaned the ECB’s course and appealed for reform. Several other lawmakers in the coalition have expressed similar views in recent days and weeks.
“Formally, the rules still exist but in practice they have been destroyed forever,” Mr. Schaeffler told Handelsblatt Online.
“We need a reform of the voting system in the ECB Council. That Cyprus and Malta have as many votes as Germany is a serious mistake,” he said. The FDP is a junior partner in Ms. Merkel’s coalition.
It is unclear whether the appeal will attract broader support from more mainstream members of the coalition.
Senior Christian Democrat (CDU) Michael Meister dismissed the debate about reforming the ECB as being an illusion.
“There is no question of changing the ECB at the moment. So this is an illusional discussion,” Mr. Meister told Reuters.
However, some opposition politicians have also expressed their unease.
Social Democrat (SPD) budget expert Carsten Schneider called on the ECB to return to its core responsibility of ensuring price stability in the euro zone.
“In truth, we are already in a debt union,” he told the Berliner Zeitung. “Under no circumstances should it take on state financing, as has already happened indirectly with bond purchases,” said Mr. Schneider.