Mario Draghi vs Germany continues

"This is how the euro will remain stable!” said the front page headline in Die Zeit, quoting European Central Bank President Mario Draghi explaining in an opinion piece for the German weekly how the ECB “could help the single currency to emerge from the crisis". His article, which has been widely interpreted as a response to the criticism of his strategy voiced by the German government and in particular by the Bundesbank, follows hot on the heels of a Der Spiegel interview with Bundesbank President Jens Weidmann, who claimed that an ECB buy-up of the bonds of heavily indebted countries would be “like a drug”. On the contrary, Mario Draghi is at pains to point out that —

The European Central Bank will do all that is necessary to maintain price stability. It will continue to be independent. It will continue to operate within the framework of its mandate. It is, however, important to understand that our mandate sometimes requires us to go beyond standard monetary-policy tools. On occasion, it requires the implementation of extraordinary measures. The adoption of such measures, if they prove to be necessary, are part of our responsibility as the central bank of the euro area as a whole.The architecture of the eurozone should be renewed, because this is the only way to safeguard long-term prosperity and stability both for the currency area in general and more particularly for Germany.

Equally, "Merkel has confirmed her refusal to grant a banking licence to the ESM," the European Stability Mechanism, announces Frankfurter Allgemeine Zeitung (FAZ). At the same time, adopting a stance that FAZ describes as provocative in an interview with Il Sole-24 Ore, Italian Prime Minister Mario Monti has warned the German Chancellor of the risk of "scoring an own-goal” if she refuses to agree to an ESM banking licence or plans to buy up the bonds of countries in crisis.

But why should Angela Merkel change her position, wonders Die Welt. On its front page, the conservative daily adds that “the anti-crisis treatment favoured by Merkel is beginning to have an impact". According to a study conducted by the German Chamber of Commerce, Portugal, Spain, Italy and Greece “have been able to increase exports and significantly reduce their trade deficits."