BERLIN - Mario Draghi was probably already expecting a tough crowd. But Hans-Peter Keitel, President of the Federation of German Industry (BDI) where Draghi was guest speaker earlier this week in Berlin, reminded him just in case.
"You’re in an environment that grew up with the Bundesbank," Keitel told the President of the European Central Bank (ECB) in his opening words. The audience had "great respect" for the Bundesbank (Germany’s national bank), which had for decades given Germans the feeling somebody was watching over their money.
To many people in Germany, the Bundesbank stands for stability, while the ECB’s monetary policies smack of carelessness – or at least they have ever since the ECB announced that it would if necessary buy up potentially unlimited quantities of government bonds from crisis-hit countries.
No other country has viewed Draghi’s course of action as critically as Germany, where the stance of Bundesbank President Jens Weidmann – the only ECB Governing Council member to have voted against the move – was widely applauded. And Draghi is unhappy about the German view, particularly as no other country’s public opinion matters as much for him as Germany’s.
During his BDI address on Tuesday night, he repeatedly stated that monetary policy alone cannot solve the euro crisis: governments must play their role.
In front of this audience Draghi may have felt a little like Giorgios Papandreou, the former Greek Prime Minister who spoke at the BDI a year ago, making the case for further help to his country. Papandreou’s pugnacious presentation ended up swaying his audience, and although Draghi opted for a gentler approach, he too was able to win over his hosts.
The ECB stood for stability, he told the industry lobby group. He too had "enormous respect for the Bundesbank, and many of the concerns that were expressed are entirely shared by me and the rest of the Governing Council - although we may have different views about the response."
In fact, Draghi disagrees with the Bundesbank’s Weidmann on only one issue, albeit vehemently: he does not believe, as Weidmann does, that there’s time to wait for the reforms in crisis countries to take hold –Draghi believes the countries won’t make it through that long.
Saying "no to everything," doesn’t work Draghi said. He said it in German, which earned him some laughs and applause. The ECB Governing Council instead chose to act to stabilize conditions for monetary policy to work.
The ECB boss also warned crisis country governments not to let up on their reform programs, stressing that there would be no help if countries did not keep up their commitment to the implementation of reforms. This was in line with the view expressed by Keitel, also held by Chancellor Angela Merkel.
The BDI audience applauded, and Draghi promised ECB vigilance. It apparently did the trick. "I think you improved confidence," Keitel said in closing remarks. "By your very clear statements especially to safeguard price stability and the clear message that the ECB would guarantee conditionality in all its measures."