26 September 2019

Financial Times: ECB’s German board member quits over loose monetary policy

Germany’s representative on the European Central Bank’s executive board has quit in a move that highlights the widening split within the institution’s top ranks over its recent decision to loosen monetary policy.

Sabine Lautenschläger’s resignation points to deep divisions at the ECB and raises the crucial question of who Germany will choose to replace her at a time when the central bank’s low interest rate policies are attracting fierce criticism within the country.

The ECB did not say why Ms Lautenschläger had quit and she could not be reached for comment. But people briefed on the matter said she felt it was the right time to leave, citing a mix of her opposition to recent monetary policy, the ending of her extra role in banking supervision and the impending succession at the top of the ECB. [...]

Ms Lautenschläger is one of the leading hawks on the council and was one of a handful of members who spoke up during the meeting two weeks ago to state their opposition to restarting the ECB’s bond-buying scheme. 

In the two weeks since the meeting, the heads of the German, French, Dutch and Austrian central banks have all publicly expressed their opposition to the ECB’s latest decision. Together those countries account for more than half of overall eurozone GDP.

Ms Lautenschläger is not the first German representative on the ECB board to quit after disagreeing with its dovish monetary policy. In 2011, Jürgen Stark quit in protest over the central bank’s purchases of government bonds in response to the eurozone debt crisis. Earlier that year, Axel Weber quit as head of Germany’s Bundesbank after fiercely opposing the ECB’s strategy. [...]

Full article on Financial Times (subscription required)

ECB press release: Sabine Lautenschläger resigns from ECB Board

Related article on Financial Times: ‘German problem’ at ECB exposed by Lautenschläger departure

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