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Germany denies would mull legal action if ECB opts for 'helicopter money'

International Business
Sun, 10 Apr 2016

Germany's Finance Ministry on Saturday denied a magazine report that it would consider taking legal action if the European Central Bank resorts to "helicopter money" distributions to euro zone citizens, an extreme form of monetary easing.

The idea of 'helicopter money', or free cash dished out to ordinary people in a bid to stimulate spending and inflation, has been bandied about in recent weeks but ECB Vice President Vitor Constancio and Chief Economist Peter Praet both said on Thursday that it was not on the table.

On Saturday Der Spiegel cited unnamed sources in the ministry as saying that if the ECB were to distribute money to citizens, the German government would consider getting a court to legally clarify the limits of the central bank's mandate.

A spokesman for the ministry pointed to the independence of the ECB, adding, "It is only independent within the framework of its legal mandate but it's not true that the German government is considering legal steps."

Unease over ECB policy is mounting in Germany, with senior politicians making the unusual move of publicly criticizing the bank this week.

Finance Minister Wolfgang Schaeuble said the ECB's policy put Germany at a disadvantage to other euro zone countries and Economy Minister Sigmar Gabriel said its ultra-low interest rates were making workers and pensioners poorer.

Finance policy officials from the conservative bloc expressed concern too, saying the ECB was operating at the limit of its mandate to deliver price stability with its policy of negative interest rates.

Der Spiegel quoted Bavarian Finance Minister Markus Soeder, a member of the Christian Social Union (CSU), sister party to Chancellor Angela Merkel's Christian Democrats (CDU), as saying the ECB's monetary policy was "wrong" and the German government needed to demand a change in direction.

"The zero-interest policy is an attack on the assets of millions of Germans who have invested their money in savings accounts and life insurance," he said.

Senior German conservative lawmaker Ralph Brinkhaus was quoted by the same magazine as saying Germany needed to "put the ECB under pressure to provide justification" because "otherwise nothing will change".

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