Discourse centered around Paul Kirchhof's interview findings.
Criticism Mounts Over ECB's Low-Interest Policy
The European Central Bank's (ECB) low-interest rate policy is facing criticism from various quarters, with former constitutional judge Paul Kirchhof labelling it as an impermissible interference with the property rights of savers.
In an interview with the daily newspaper "Die Welt", Kirchhof argued that artificially low-interest rates impair savers' ability to earn a return on their deposits, effectively reducing the value of their savings. He further stated that negative interest rates further expropriate savers, transferring private property into public hands.
However, the ECB and many economists view the policy as a legitimate monetary tool aimed at broader economic stability and growth. The ECB's rationale for maintaining low rates centers on its mandate to ensure price stability, support employment, and foster economic growth in the Euro area.
Tiemo Kracht, Managing Director of the personnel consultancy firm Board Connect, has also joined the discussion. In a LinkedIn post, Kracht questioned whether banks may actually reduce savings balances, despite the ECB's policy. Kracht remains a critic not only of the ECB's interest rate policy, but also of its purchase policy.
Klaus-Jürgen Siewert of the Berlin Volksbank agrees with Kirchhof that the ECB has become the most powerful institution in the EU, not subject to parliamentary control. Richard Böger, CEO of the Bank for the Church and Caritas, also raised doubts about Kirchhof's thesis that there is a right to a positive interest rate.
Despite the criticism, the ECB's policy remains widely defended as an essential element of contemporary monetary policy. While low rates reduce income from savings, they also reduce borrowing costs and support investment and consumption, aiming at balancing overall economic well-being.
Empirical evidence points to the policy’s complex impact on economic factors such as housing affordability and bank stability, rather than a direct confiscation or illegal deprivation of property value.
In conclusion, while the criticism reflects concerns about savers’ interests and constitutional rights, the ECB’s policy remains widely defended as an essential element of contemporary monetary policy with no definitive legal consensus against it. The debate continues to rage on, with financial experts and ordinary citizens alike weighing in on the implications of the ECB's low-interest rate policy.
[1] Housing affordability and the ECB's monetary policy
[2] The impact of the ECB's monetary policy on bank stability
[3] The legal implications of the ECB's low-interest rate policy
