Merkel vows to defend ECB independence
21 September 2007, Frankfurt (AFP) - Chancellor Angela Merkel vowed Thursday that Germany would strongly defend the independence of the European Central Bank, the target of fierce criticism from French President Nicolas Sarkozy.
21 September 2007
Frankfurt (AFP) - Chancellor Angela Merkel vowed Thursday that Germany would strongly defend the independence of the European Central Bank, the target of fierce criticism from French President Nicolas Sarkozy.
Germany remains the ECB's staunchest backer, with its independence a direct heritage from the German central bank, or Bundesbank.
"The whole government including myself believes in the independence of the ECB," Merkel told the Bundesbank's 50th birthday bash in Frankfurt.
Since its creation in 1999, the bank has been subjected to various degrees of criticism for its monetary policy, often from France or Italy, but an attack at the weekend by Sarkozy was sharper than usual.
Sarkozy claimed that the bank helped "speculators" and neglected "entrepreneurs" by pumping billions of euros into the banking system while leaving interest rates unchanged amid financial market turmoil.
ECB president Jean-Claude Trichet, a Frenchman, was also at Thursday night's dinner for the Bundesbank and he was quick to express his gratitude for the German position.
"Everybody at the ECB thanks you for the force and the warmth of your support," he said.
"I would like you to remember that the stability of prices and the independence of the central bank are defended day after day because they are always tested."
As a young central bank, the ECB does not yet have the stature of the US Federal Reserve or the Bank of England.
As a result, some observers say, it might overreact sometimes to advice that comes from outside.
And the bank's strong attachment to its mandate of keeping inflation in check is also said by some to reflect the absence of a single budget policy or true economic integration within the 13-nation eurozone.
Subject: German news