New ECB chief urges Europe to overcome self doubt
Frankfurt, Germany - Christine Lagarde steered clear of monetary policy in her first speech as European Central Bank (ECB) president, calling instead for ‘strength, resolve and courage’ in the region at an award ceremony for former German finance minister Wolfgang Schaeuble.
“I believe this is a message all of Europe needs to hear today,” Lagarde said in Berlin late Monday. “A call to remember our better selves and not to allow self-doubt to drag us down.”
On her first working day at the central bank, Lagarde stayed away from discussing monetary stimulus - typically controversial in Germany - and said anyone who wanted to hear her views on the topic should ‘please leave the room’. Still, she joins the institution at a key moment, with the euro-zone economy again under stress and the ECB putting increasing pressure on politicians to step up with fiscal measures and structural reforms.
Germany, the region’s largest economy, has faced criticism for continuing to run a budget surplus, watering down proposals such as a euro-area fiscal capacity, and stemming progress towards a common deposit insurance. Schaeuble, now the head of Germany’s lower house of parliament, has often vilified the ECB, even blaming its loose monetary policy for contributing to the rise of right-wing populism in Germany.
In showering praise on Schaeuble, Lagarde called him a formidable negotiator, and a straight-talker with a forensic mind. “You are notorious for your ability to pick apart shallow arguments and for your intolerance of superficiality.”
Last week Lagarde said there wasn’t enough solidarity in the 19-nation region as she called on Germany and the Netherlands with their ‘chronic budget surpluses’ to look at ramping up investment. Establishing a bond with Germany will be one of her key challenges.
The most recent Eurobarometer survey of public opinion showed 40 per cent of the country’s population tends not to trust the ECB. Former ECB chief Draghi was portrayed by tabloid media as sucking German savers dry with his negative rates, and Bundesbank president Jens Weidmann has been a long-standing critic of quantitative easing.
On Monday, Lagarde said, “Of course, there have been different views about what constitutes a ‘good solution’ for Europe, such as the appropriate balance between sharing risks and reducing risks.”