ITALIAN CENTRAL banker Mario Draghi made a public play to head the European Central Bank (ECB) yesterday by describing Germany’s economic model as “exemplary” for the euro zone.
Mr Draghi’s remarks to the influential Frankfurter Allgemeine daily appear designed to overcome German reservations to his candidacy just days after Bundesbank head Axel Weber pulled out of the race to succeed Jean-Claude Trichet in the autumn.
Meanwhile, German chancellor Angela Merkel will today announce Jens Weidmann, her economic adviser, as the new president of the Bundesbank. Mr Weidmann, a 42-year-old former student of Axel Weber, was scheduled to move to the Bundesbank as vice-president in the autumn.
“We should all follow the German example,” said Mr Draghi to the FAZ. “Germany improved its competitiveness through structural reform. That should be the model.”
He backed the Franco-German euro zone reform plans and insisted the ECB must stick to its priority of price stability.
“One has to understand that price stability was the basis of German growth and now must be the basis for all of Europe,” he said. “We’re on the right course [to achieve this].”
To Germans who doubt his credentials as an inflationary hawk, he insisted that “it doesn’t help weaker states if growth in stronger states is accompanied by inflation”. He said the idea of eurobonds – vehemently opposed in Berlin – made as much sense as “someone grabbing an elephant by the tail to take him for a walk”.
The current interest rate spread among euro zone sovereign bonds was a reflection of different budgetary situations, he said. In an apparent nod to countries like Ireland and Greece, who benefited from low interest rates in recent years, he added: “Too-low risk premiums don’t bother anyone until it’s too late. Then the [market’s] overshooting correction leaves all suddenly very concerned.”
By speaking to the Frankfurter Allgemeine, house journal of Germany's conservative establishment, Mr Draghi made a none-too-subtle appeal to overcome their reservations about an Italian candidate or, at the very least, to free him from guilt by association.
