Mario Draghi reacted badly to the German criticism of the bond plan of the ECB

The ECB President Mario Draghi reacted badly to the criticism of Germany concerning his wanting to intervene in bond markets. Moreover, he reminded the largest economy of Europe to anchor the euro.

Draghi has recently commented that the European Central Bank is always willing to act within the limits of its mandate and said that sometimes they need to go beyond standard policy tools it order to fulfill their mandate.

Some German politicians and Bundesbank President Jens Weidmann did not agree with the plan of Draghi to take up again government bond purchases in order to lower borrowing costs in some countries like Spain or Italy.  Chancellor Angela Merkel has shown great support for the bond buying of the EBC.

Mario Draghi has written that the ECB is not an institution but it is wholly dedicated to its responsibilities to the European Union. He said that the bank had never lost sight of its mission to provide a stable currency.

According to Weidmann, bond purchases will lead to the government being more reliable on the central bank and that would not solve the debt crisis in Europe.

Draghi’s plan includes winning government time for the implementation of fiscal reforms and making sure that any assistance is comes with conditions. The plan requires the request for aid from Europe’s bailout fund by distressed governments, which will also have to sign up a memorandum of understanding before the reducing of bound yields by the ECB if necessary.

The systematic risk includes the fact that ECB could become a risk to the financial system. What the EBC is doing to change the euro is illegal, added Frank Schaeffler.

Mario Draghi commented that in order for Germany to continue to prosper, it has to be an anchor of a strong currency.

A senior economist at Berengerg in London,Christian Shulz said that Draghi  seems to think that his critics are anti-European. He also said that there has been many misleading by the German politicians concerning what the ECB will do and what will come for the euro.

Draghi is convinced that they need a structured and gradual effort to complete EMU and if this happens, the euro will have stable foundations He says that the euro is founded on peace, prosperity and stability.