High-level working group calls on ECB Governing Council to turn around monetary policy

On the occasion of the meeting of the ECB Governing Council on 16 December 2021, a high-level working group headed by former prime ministers and candidates for chancellor Peer Steinbrück and Edmund Stoiber is calling on the European Central Bank to do more to reduce the increasing inflation rate. Stoiber and Steinbrück: "The ECB is neglecting its fundamental task of maintaining price stability by not adjusting
its ultra-loose monetary policy despite rising inflation rates. Contrary to the ECB's assumption that the trend is temporary, there is a high risk that inflation expectations will become entrenched, thus driving inflation further."

The resignation of the leading voice for stability in the ECB Governing Council, Bundesbank President Weidmann, should serve as a warning, they said. "We expect the ECB Governing Council to send a clear signal for a turnaround in monetary policy at its meeting and as a first step to substantially reduce bond purchases." Stoiber and Steinbrück call on the German Bundestag to critically monitor the ECB's activities.

It is open to question, they said, whether the ECB is still acting within the scope of its monetary-policy authority or is already actively conducting economic and fiscal policy. However, assuming such a guiding function would not be in line with its mandate and would not be democratically legitimized.

According to Stoiber and Steinbrück, the massive increase in the inflation rate, which is now well over five percent in Germany, is placing a heavy burden on the weaker social strata in particular: "Beyond the devaluation of savings deposits due to zero interest rate policies, rising energy and food prices are tearing big holes in the pocketbooks of low-income earners. The ECB's monetary policy is therefore socially detrimental.

It favours the strong and neglects the weak."
Moreover, the government bond purchases combined with the ECB's zero interest rate policy led to false incentives for higher debt in the Eurozone. They further noted that there should not be limitless consideration for highly indebted countries. Stoiber and Steinbrück: "The ECB is promoting the illusion that rising government spending can be financed permanently at zero and negative interest rates, even without growth-enhancing reforms. The longer the ECB delays in initiating the necessary turnaround in interest-rate policy, the more harmful the economic and fiscal consequences will be."

The conclusion of the working group headed by Stoiber and Steinbrück: "The multiple adverse effects no longer justify the continuation of the ECB's ultra-expansionary monetary policy. The ECB must gradually but swiftly decrease the volume of bond purchases and again reduce the inflated money supply."

The working group includes the following individuals (in alphabetical order):
Paul Achleitner, Chairman of the Supervisory Board of Deutsche Bank
Roland Berger, former CEO of Roland Berger Strategy Consultants
Reinhold Bocklet, former Bavarian Minister for Europe
Nikolaus von Bomhard, Chairman of the Supervisory Boards of Munich Re and Deutsche Post DHL Group
Christine Bortenlänger, Managing Member of the Executive Board of Deutsches Aktieninstitut
Kurt Faltlhauser, former Bavarian Minister of Finance
Ulrich Grillo, former Chairman of the Federation of German Industries
Gerd Häusler, former Chairman of the Board of Management of BayernLB
Jürgen Hambrecht, former Chairman of the Board of Executive Directors and Chairman of the Supervisory Board of BASF SE
Wolfgang A. Herrmann, former President of the TU Munich
Roland Koch, former Minister President of Hesse
Günther Oettinger, former Vice President of the EU Commission and Minister President of the State of Baden-Württemberg
Wolfgang Reitzle, Chairman of Linde
Hans-Werner Sinn, former President of the Ifo Institute
Peer Steinbrück, former Federal Minister of Finance
Edmund Stoiber, former Bavarian Minister President
Linda Teuteberg, Member of the Bundestag and former Secretary General of the FDP
Antje Tillmann, Member of the Bundestag and financial policy spokeswoman for the CDU/CSU parliamentary group
Klaus Töpfer, former Federal Environment Minister
Marcus Vitt, Board Spokesman of the private bank Donner & Reuschel
Franz-Christoph Zeitler, former Vice President of the Deutsche Bundesbank

In two guest articles in the Frankfurter Allgemeine Sonntagszeitung on 15 March 2020 ("Für eine neue Geldpolitik der EZB") and the Süddeutsche Zeitung on 12/13 May 2021 ("Erwartungen an eine zukunftsfähige.
Finanz- und Geldpolitik in Deutschland und Europa"), the working group argued for a tightening of monetary policy and a return to sound fiscal policy.

Über DONNER & REUSCHEL
Das Traditionshaus mit Sitz in Hamburg, Kiel, München, Bremen und Düsseldorf setzt auf qualifizierte und umfassende Beratung für vermögende Privatkunden, Unternehmer und Immobilienkunden sowie institutionelle und Capital Markets Kunden. Im Jahr 1798 wurde die Hamburger CONRAD HINRICH DONNER Bank von dem 24-jährigen Kaufmann und Reeder Conrad Hinrich Donner gegründet. Im Jahr 1990 stellte sich mit der SIGNAL IDUNA Gruppe ein starker Partner und Aktionär an die Seite des Bankinstituts. Im Oktober 2010 schlossen sich die Hamburger CONRAD HINRICH DONNER Bank und das Münchner Bankhaus Reuschel & Co. zu DONNER & REUSCHEL zusammen.

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