The European Central Bank's government bond purchases are necessary and the benefits far outweigh the side effects, ECB board member Isabel Schnabel said on Saturday, pushing back on a court challenge from her native Germany.
FILE PHOTO: Isabel Schnabel, member of the German advisory board of economic experts attends the 29th Frankfurt European Banking Congress at the Old Opera house in Frankfurt, Germany November 22, 2019. REUTERS/Ralph Orlowski
Germany’s Constitutional Court ruled last month that the ECB overstepped its mandate with 2 trillion euros worth of government bond buys over the past five years and ordered the Bundesbank to quit the programme, unless the ECB could prove within three month that the purchases were proportional. “For the average saver, the additional losses arising from our new policy measures are very small,” Schnabel said. “The measures taken by the ECB in response to the crisis have been necessary, suitable and proportionate to ensure price stability in the euro area.”
“Had we instead cut the rate on the deposit facility to counter the current crisis, the estimated losses would have been almost as large as the total losses accumulated over the course of the past six years,” she said.
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