Putting out fires

Germans have growing psychological problems with the European Central Bank (ECB). The bank should be as independent and stable as the Bundesbank, the German central bank, bound first and foremost by the goal of price stability. That mandate was given to the ECB back when it was founded.

But in the last few years of Jean-Claude Trichet's term as ECB president, the bank has suffered damage to its reputation. The main reason has been the massive purchases of sovereign bonds from indebted eurozone countries - a sin for Bundesbank purists.

The former head of the Bundesbank, Axel Weber, who was once seen as shoe-in as Trichet's successor, didn't want to be considered as a candidate under these conditions. And, the ECB's head economist, Jürgen Stark, stepped down prematurely from the board.

The retreat by both men strengthened the impression among the German public that the ECB had finally strayed from the path of virtue. Technically, that's true, but there was hardly any other option left for the ECB in the eurozone crisis.

The bank saw itself forced to stabilize the financial system because political negotiations had taken too long. As long as credible consolidation policies in many eurozone countries weren't completed and institutional mechanisms for containing the crisis were missing, the ECB was the only one able to take action.

Fortunately, the most recent summit in Brussels took the most pressing decisions, even if the problems still are far from being solved. In the future, for example, the European Financial Stability Facility (EFSF) will be able to purchase sovereign bonds of indebted countries. That will take a significant burden off the ECB. But many details are still unclear, and it is still possible that the ECB will need to jump in again to put out the flames.

The idea of evaluating an ECB president according to nationality is, however, completely absurd. Even when Trichet was at the beginning of his term, many in Germany wrinkled their noses at the Frenchman - the argument being that as a Frenchman, he couldn't be anything but a slave to politics and thus couldn't be trusted.

When Axel Weber threw in the towel and Italy's Mario Draghi started to come into focus, it was seen as an even worse catastrophe. That is nonsense

First, the ECB obviously doesn't select its president alone. The central bankers of all 17 eurozone countries take part in the decision. And because Draghi knows the stereotypes, he'll be especially active in trying to prove them baseless. Even in Italy he's earned the reputation as a moral straight shooter.

An ECB president from Greece would probably be the best, but that might take a little more time.

Author: Christoph Hasselbach / mz
Editor: Nancy Isenson