Christine Lagarde, the president of the European Central Bank (ECB), defended Monday the stimulus measures adopted by the institution in response to the crisis caused by the pandemic, saying that they are proportionate to the risks to the economy of the euro zone.
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Heard at the Economic and Monetary Affairs Committee of the European Parliament, Christine Lagarde, was criticized by Dutch and German deputies who questioned the major purchases of sovereign debt from the ECB.
" Temporary, targeted and proportionate " measures
The German Constitutional Court inflicted a major setback on the European central bank at the beginning of May by asking it to justify its program of buying State loans without which the Bundesbank, the German national central bank, will have to stop participating in it. Christine Lagarde stressed that the ECB had taken “ proportionality ” into account in its decisions and carried out a “ cost-benefit analysis ” - two keywords of the German decision. " Our measures against this crisis are temporary, targeted and proportionate (...) to the serious risks we face, " she said. She added that BCE would help the Bundesbank address the court's concerns.
Derk Jan Eppink, a Dutch MEP from the European Conservative and Reform group, said that the massive purchases of ECB debt were aimed at keeping southern European countries afloat. He dotted his words with references to the novel " David Copperfield " by Charles Dickens where a character finds himself in prison after having accumulated debts and to Queen Marie-Antoinette, guillotined during the French Revolution after a life of opulence and excess.
The European Central Bank announced Thursday an increase of 600 billion euros in the amount of its Pandemic Emergency Purchasing Program, a plan to lower the costs of financing governments, businesses and households. Christine Lagarde said that ECB policy " would ensure that the higher borrowing needs of the tax authorities (do not translate) into significantly higher interest rates for the private sector ".