BERLIN (Reuters) - Germany’s best-selling newspaper, Bild, on Friday accused European Central Bank President Mario Draghi of “sucking dry” the accounts of Germany’s savers, a day after the bank cut interest rates deeper into negative territory.
Hoping to jump-start economic activity nearly a decade after the euro zone’s debt crisis, the ECB on Thursday also announced that it would purchase bonds for an unlimited period, a measure that would push borrowing costs even lower.
The bigger-than-expected stimulus immediately fuelled concerns among frugal Germans, who have complained for years that the ECB’s is denying them a decent rate of return on their savings.
Next to a photomontage of Draghi with fangs and dressed as a vampire, Bild’s headline read: “Count Draghila is sucking our accounts dry ... The horror for German savers goes on and on.”
The newspaper has taken aim at Draghi before.
During the euro zone crisis, Bild gave the Italian a spiked Prussian helmet to encourage him to stick to German-style discipline. Draghi put the helmet on a shelf in his office.
Voicing Germans’ concerns, Helmut Schleweis, president of Germany’s savings banks association, said the ECB’s latest policy package “does more harm than good”.
German Finance Minister Olaf Scholz sought to calm worried savers.
“Most contracts that customers have with their banks do not currently allow such penalty rates, so the problem is not acute,” Scholz said. “Banks’ boards are wise enough to grasp what they would trigger with such penalty rates.”
In an interview with Bild, Jens Weidmann, president of the Bundesbank, Germany’s central bank, said the ECB’s unnecessarily large stimulus package was favourable for home buyers seeking low-interest mortgages but savers will be worse off.
“People who want to build (homes) will probably get cheap credit,” Weidmann said. “Savers will be worse off. But they could profit from secure jobs. It will be particularly difficult to make provisions for old age without taking more risk. Pension funds and life insurers will feel this most.”
Joachim Wuermeling, a Bundesbank board member, sounded a warning for savers. “Banks could soon pass on lower interest rates to even more customers,” he told Focus magazine.
Nobody should be surprised if banks demanded higher fees and were considering negative interest rates, Wuermeling said. “It may be necessary from a business and banking supervisory point of view,” he added.
Zero rates have fuelled a property boom in Germany, encouraging people to take out large home loans and attracting a flood of foreign money from international pension funds.
This has prompted a political backlash against these investors, with a national debate on how to curb spiraling rents.
Germans have long looked to the Bundesbank as a pillar of stability and guarantor of a stable currency.
Formed in 1957, it was a model for central bank independence in the years that followed, but its president is now just one voice on the ECB’s Governing Council.
New Austrian National Bank Governor Robert Holzmann, who also sits on the ECB’s policymaking Council, said the ECB’s policy met “pushback” this week.
Asked whether the new measures were a mistake, Holzmann told Bloomberg TV: “I’m sure this idea crossed the mind of some people and it definitely crossed my mind.”
Additional reporting by John O'Donnell and Joseph Nasr; Editing by Raissa Kasolowsky and Giles Elgood