Draghi rejects Trump's accusation of currency manipulation

"Target is a payment system that works very well," said Draghi. "People who want to cap, balance or hedge balances do not like the euro because that is the system used to settle payments in a monetary union." The national central banks of the eurozone make payments to each other via balances vis-à-vis the ECB. With the paying bank, this balance diminishes, the one receiving it increases. As the Bundesbank has received many payments, its balance has reached nearly one trillion euros, which has sparked criticism and concern in Germany.

million. Draghi said the balances had increased mainly thanks to central bank bond purchases. "The rest is secondary," he said. According to him, about half of the sellers are banks outside the euro zone that have their accounts in "one or two countries".

The Bundesbank also attributes the effect of the fact that many banks sellers have their accounts in Frankfurt, so the high payments from other countries, such as Italy and the United States, are not the same. Spain, circulate there when local central banks buy bonds. The ECB has acquired 2,446 billion euros of bonds over the last three years, but intends to phase out the additional purchases by the end of the year. ;year.

A Stronger Foundation

Six years ago, Draghi's most famous saying was: "The ECB will keep the eurozone together, whatever the cost." At that time, there were fears that the monetary union could break. "Compared with the times, the euro is on a much stronger basis today," said Draghi. He added: "The Governing Council of the ECB is proud to have managed to maintain price stability even during the difficult years."

The criticism of US President Donald Trump that the European currency is artificially depressed, "We are at a more advanced stage of the cycle than the US Federal Reserve," he said, justifying the low interest rates . In addition, the euro has even appreciated against a basket of other currencies in just over a year.

However, investors who hoped for a sense of monetary policy were disappointed after the meeting of the ECB's Governing Council. As expected, key interest rates remain unchanged at 0% and bank deposits at 0.4%. In addition, Draghi reiterated that the ECB would be net next year, would buy more bonds, but only replace the expiring newspapers.

He remained with the vague wording of previous sessions, at least "in the summer of 2019", interest rates should not be increased "

A little pressure on wages [19659006] On multiple questions, how exactly does the ECB want to replace bonds maturing next year, he replied only: "We have not discussed it." There was some speculation in advance that the ECB might prefer long maturities for replacement purchases in order to keep long term yields low and provide additional support to the economy. Here and there it was also feared that the ECB would deviate from the purchase of government securities according to the firm key that results from the national ownership of its own balance sheet. Draghi said: "He stays with the capital key." The question has political explosiveness: Any deviation could be interpreted as favoring or disadvantaging individual countries.

The President of the ECB said that economic developments suggest that more recent data a slight temporary weakness. Inflation recently rose to 2.0%. The target of the ECB is just under two percent. Underlying inflation, which excludes fluctuations in energy and food prices, has recently declined slightly to around 1%.

Draghi pointed out, however, that more and more wage negotiations were leading to higher wages, whereas previously the average earnings had increased only because of the increase in the best jobs. It badumes that in the medium term prices will be defeated.