Freitag, 25. November 2011

How Monti works on a changed ECB-role

Yesterday's summit in Strasbourg has proved, that the future architecture of European leadership will be different from the German-French "Directorate", that was in place since the Greek crises has begun. Under the highly respected Mario Monti Italy is returning on the stage. Both, German Chancellor Merkel as well as the French President Sarkozy have made that clear yesterday, with words but also with gestures. The dark days of Italy's international isolation caused by Berlusconi are definitively over. But what will Monti do with the renewed influence?

Be sure, that he has apart from his domestic an articulated European agenda. The Professor spent during his two mandates as EU-Commissioner so much time on Brussels that he is a truly European and remains an indiscussed expert on all communitarian matters.
During the trilateral meeting yesterday the leaders have talked also about the two hottest topics at the moment: Eurobonds and a changed role of the ECB as lender of last resort. Listening to them afterwards it became clear that the first topic remains unpalatable to Germany. The fact, that Sarkozy as a strong advocate for Eurobonds showed a super-cautious attitude during the press conference is a signal, that not only Merkel but also Monti has influenced him, to be more realistic.

Even more interesting than that is, what the three said and what they didn't say about the ECB: they underscore the total independence of the Central Bank from politics. After the criticsm, that Merkel didn't even try to hide in the last months, this is a new tonality. Also here: hard to believe that Monti has been ininfluential to this. Nobody talked about about a possible new role of the ECB, which in combination with the highlightig of the independence makes a lot of sense. Why? Because it means that the institution led by Mario Draghi could have in the future more options to interpret it's role with more freedom and without the current risk, that the governments, overall the German,  interfere too heavily. I can imagine that Bundesbank Governor Jens Weidmann, a former Merkel advisor, who is categorically against any enlargement of the role of the ECB, was not amused yesterday. Without the political rear cover he will feel on the future more and more alone in his fight, because most members of the governing council, including President Draghi, are more open to discuss about a new interpretation of the role for the ECB. By the way: it would be strange if Monti and Draghi, who know each other very well, have not talked recently exactly about that.

So I proved right yesterday in saying that Italy under Monti will start to influence in a critical manner the current discussions, but I proved wrong in saying, that this would be bad news for Angela Merkel. On the contrary, my impression is now, that she will one day use the new set-up of the European leadership to explain at home, because Germany has to accept, that the ECB becomes more Fed-like as lender of last resort. She knows perfectly that it's always better to digest controversial decisons with a convincing narrative.


  1. Actually, Ms Merkel could have gone to the european court to hinder the ECB from buying bonds (it' against the statutes of the ECB). The fact that she didn't do that proves that she accepts that up to a certain extend. I guess (hope) they will find a kind of compromise to define some rules to avoid the moral hazard problem for such bond buys, and to open a road for such a solution.

  2. Interesting analysis!