25 years of the European Central Bank - Volker Wieland is taking stock (Tagesschau, Tagesthemen, Deutschlandfunk, HR, HR-Info)

On June 1, 1998, the European Central Bank (ECB) began operations in Frankfurt with the aim of maintaining price stability in the euro area. On the occasion of its 25th anniversary, Prof. Volker Wieland took stock of the ECB's achievements in several television reports, radio interviews and podcasts.

Started to advance the European unification process with a common currency, the ECB, according to Wieland, is responsible for "a very unique constellation, namely monetary policy for a union of otherwise largely sovereign states, the like of which has never existed before. So far, the institution has managed this "much better than many skeptics and critics had expected," he said in an interview with "Tagesschau" (from 10:00 min). But in crises, he said, the central bank had repeatedly acted as an emergency helper. Now that the ECB has bought up government debt of 25 to 45 percent of the total debt of individual countries, he sees the central bank in a dilemma.

The massive increase in inflation since 2021 to up to double-digit rates has pretty much tarnished the ECB's credibility, Wieland said in an interview with "Tagesthemen" (from 23:50 min). Now the ECB urgently needs to get inflation under control and reduce its balance sheet to be prepared for future crises, he elaborated in an interview with NDR-Info. In a stock market interview with Deutschlandfunk, Wieland warned the central bank to raise interest rates even further. "The ECB has reacted very late." It could have started raising interest rates as early as 2021, given the inflation trend in the second half of the year, but proceeded more slowly. "That would have been easier for the financial system," he said.

Against this background, Wieland urged the central bank in an interview on Tageschau24 (from 18:55 min) to focus on its main task: price stability. With an inflation rate of five or ten percent, other tasks such as climate policy cannot be allowed to play a role, he said. "The ECB must focus on price stability," Wieland said.

With the massive purchase of government bonds and the introduction of new instruments, such as most recently the crisis instrument TPI - for Transmission Protection Instrument - in July 2022, the ECB has put itself in a difficult situation, according to Wieland. The TPI allows the ECB to make targeted and unlimited bond purchases of individual highly indebted countries. "These countries want the ECB to keep interest rate spreads low, but they are actually important to discipline highly indebted countries," Wieland said on the HR Info Business Podcast (starting at 11:30 min). "In doing so, the ECB has exposed itself to a lot of pressure from member states." The ECB's political independence is a cornerstone of the euro area's monetary system and is intended to protect the central bank from political interference. It is also important "that it presses member states to ensure sustainable finances," Wieland said. Fiscal rules, which are currently suspended, must be reactivated, he urged HR podcast "Der Tag". "Because that is what protects the independence of the ECB."

Wieland has organized the conference "The ECB and Its Watchers" since 2004. In the HR podcast "Der Tag," he explains (starting at 15:45 min) what is special about the event, at which representatives of the ECB and other central banks, financial market participants and academics discuss current monetary policy issues. "It is very remarkable that the ECB duels, discusses and debates with critics from the financial world and academia in front of the eyes and ears of journalists," Wieland summarized the aim of the event, which was launched in 1999 by then ECB chief economist Otmar Issing together with Axel Weber, also in the HR Info Business Podcast. In its communication, the ECB plays a pioneering role among central banks.

Tagesschau / Tagesthemen / Tagesschau.de
Deutschlandfunk-Wirtschaft am Mittaq-Börsengespräch
HR-Podcast "Der Tag"
Deutschlandfunk - Kalenderblatt