Are Draghi’s Days Counted?

Economy Jamie Simon
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Mario Draghi, the European Central Bank President, will meet for the first time Wednesday, 9/28, questions from members of the European Affairs Committee of the German Parliament. Will he escape unharmed?

As it was announced, the meeting will not be easy for the Italian aged 69 years old. The German deputies have proposed to put the ultimate guardian of the euro some unpleasant questions. Draghi is criticized because the European Central Bank (ECB) is trying for months to stimulate the economic situation through a program of purchases of shares worth trillions. Initially it was to be bought only government bonds but meanwhile, ECB bought securities without a certain coverage.

This program has been very helpful so far. Nowhere in the euro area, the zone can be observed the momentum generated by the avalanche of money thrown by ECB on the market. As a justification, let’s say that it is an acceptable argument that no program can do something against the shock that the Brexit had, the sanctions against Russia or the commodity prices, primarily oil. This cheapening reduces the gain of the emerging countries, rich in raw materials, lacking money for imports from Europe and the euro area.

Meanwhile, John Cryan, head of Deutsche Bank, thinks that Draghi’s monetary policy does more harm than good. The ECB has done much in the midst of financial crisis and sovereign debt to stabilize Europe.

‘But in the meantime, the monetary policy has detrimental effects to the goal of strengthening the economy and make the European banking system safer,’ Cryan wrote in an article published in the German newspaper Handelsblatt.