Former central banker Issing: "ECB does not seem to have the situation under control"
Created: 2022-11-10, 3:48 p.m
By: Lisa Mayerhofer
Otmar Issing, former chief economist and former member of the Executive Board of the European Central Bank (archive image) © Arne Dedert/dpa
The European Central Bank (ECB) braces itself against record inflation.
Otmar Issing, a former member of the Executive Board of the ECB, sees this partly as a failure on the part of the monetary authorities.
Frankfurt – The war in Ukraine and the galloping energy prices pose major challenges for the European Central Bank (ECB) in 2022.
The monetary watchdogs are bracing themselves against the record inflation with strong interest rate hikes.
At the same time, the euro is experiencing a rapid fall in value and has fallen to its lowest level in 20 years in recent weeks.
Issing: The ECB should have exited crisis mode earlier
According to the economist Otmar Issing, the ECB is partly to blame for the current situation.
Issing is a former Chief Economist and former Executive Board member of the ECB.
In 1998 he was instrumental in drafting the monetary policy strategy of the monetary authorities.
The ECB could not have foreseen this increase in energy prices as an external shock "on this scale" ,
the economist told
ocus.de.
For him, "the actual failure of the ECB" lies much further back.
Because: “The ECB should have gotten out of crisis mode by the summer of last year at the latest,” said Issing.
In his opinion, the monetary watchdogs have been stuck in a crisis mode for far too long, which they initiated after the financial market crisis in 2008 and “intensified again during the pandemic”.
“But this crisis mode could no longer be justified for a long time.
It was therefore inevitable that sticking to such an expansive course, when the economy had long since recovered significantly, would intensify price pressure at some point," explains the ex-ECB banker to
focus.de
.
Ex-ECB banker: "The fall in value of the euro affects me very much"
And now?
Issing thinks that the ECB
apparently not in control of the situation.
Because: “In September, producer prices in Germany rose again by 45.8 percent compared to the previous year.
The rate for the entire euro area is similarly high.
That means there is still some price pressure in the pipeline," he told the online portal.
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The 86-year-old economist admitted that he was very concerned about the fall in the value of the euro.
"I have always emphasized that the euro will be as stable as the D-Mark." He was often even ridiculed for this.
But: "In the first 25 years of its existence, the euro performed extremely well in terms of the inflation rate." That's over now - "unfortunately all too clearly."
With material from the dpa