It has been an interesting week as bickering members of the European Central Bank’s Governing Council continue to trash-talk each other in public. This time, the controversy is over the amount the ECB has committed to buy assets to help stimulate the economy.
On Wednesday, Germany’s Axel Weber – a member of the Governing Council since 2004 and a former President of the Deutsche Bundesbank – said that the ECB would limit expenditures to 60 billion euros and that only covered bonds would be considered appropriate assets for the Bank to purchase.
The very next day, Marko Kranjec – also a member of the Governing Council representing Slovenia – openly contradicted Weber saying that it is likely that that the Bank would spend far more than 60 billion euros and would also buy assets including corporate bonds and commercial paper as part of the stimulus plan.
While ECB bankers airing their dirty laundry for all the world to see is nothing new, the timing for this most recent spat couldn’t be worse. The whole point of buying assets and injecting cash into the economy is to instill confidence and convince consumers that it is safe to invest and spend. But when these so-called leaders are incapable of a promoting a simple, unified message for the media, one can only wonder what kind of chaos reigns behind closed doors.
ECB President Jean-Claude Trichet needs to get everyone on the same page and quickly or risk prolonging the recession in Europe even as other regions begin to make progress.
About the Author
Scott Boyd has been working in and writing about the financial industry since the early 1990s. As a technical writer and project manager with several of Canada’s leading financial institutions, Scott has produced educational materials for investment system end-users including portfolio managers and traders. Scott now administers and contributes to OANDA FXPedia and regularly provides commentaries for the OANDA FXTrade website.
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