goldcore.com / By Mark O’Byrne / October 24, 2012
Mario Draghi travels to Berlin today to meet with key German parliament members involved in the eurozone crisis policy. This private meeting is the ECB president’s effort to defend his new bond buying plan as a legitimate instrument in its monetary policy arsenal.
Germany’s legislative backing is critical for Draghi’s plan to buy up Spanish and other eurozone area government bonds.
The Bundesbank president, Jens Weidmann, says the program is tantamount to financing governments by printing money, which is prohibited by the ECB’s founding treaty.
ECB presidents normally give evidence to the European parliament but rarely if ever address national legislatures especially behind closed doors. This journey is highly unusual but a critical sell for Draghi. Today’s session will be followed by a press briefing at 4pm local time by Mr. Draghi and Bundestag leader Norbert Lammert.
The main goal will be to convince lawmakers that the ECB is committed to keeping inflation low.
Draghi’s plan outlines that the ECB will only buy a government’s bonds on the secondary market after it has agreed to economic reform measures set out by the single currency zone’s finance ministers and the IMF.
Although, Weidmann and other German politicians have been vocal in their objections, Chancellor Angela Merkel has backed the plan and asserted that it isn’t outside the central bank’s mandate.
Thanks to BrotherJohnF