By appearing before a joint session of three committees of the German parliament in Berlin today, the European Central Bank president is seeking popular support in Europeâ€™s largest economy for his plan to purchase government bonds to stem the debt crisis. While Draghi says his so-called Outright Monetary Transactions are required for price stability, some German policy makers say they are an affront to the monetary orthodoxy upon which the ECB was founded.
â€œDraghi is on a mission to smooth concern that OMT wonâ€™t send inflation skyrocketing or lumber German taxpayers with liabilities they canâ€™t pay,â€ said Frank Schaeffler, finance spokesman for the Free Democrats, who are in coalition with Chancellor Angela Merkelâ€™s Christian Democrats. â€œMany lawmakers — even if they donâ€™t admit it — have grown suspicious of the ECB and its head, once dubbed the most German of non-German central bankers.â€
While the announcement of Draghiâ€™s yet-to-be-deployed bond- buying program has calmed financial markets, Germanyâ€™s revered Bundesbank has openly opposed the plan, fanning concerns among politicians and the public. Some 42 percent of respondents to a Stern survey published Sept. 6 said they had little or no trust in the ECB president, compared with just 18 percent who judged him favorably.