FRANKFURT, Germany (AP) — A member of the European Central Bank’s leadership has resigned after publicly questioning the need for the bank’s stimulus efforts, opening an unexpected vacancy on the institutions’ top executive body amid public criticism of its policies by some of its own officials.
Sabine Lautenschlaeger’s resignation comes amid criticism in her native Germany of the stimulus program decided by the bank under President Mario Draghi, who is to be succeeded by former IMF head Christine Lagarde Nov. 1.
The ECB said in a statement on Wednesday that Lautenschlaeger would leave her post on the bank’s six-member executive board at the end of the month, more than two years before the end of her eight-year term. The statement did not say why she was resigning.
Still, Lautenschlaeger had questioned the need for more bond-purchase stimulus before a Sept. 12 meeting, saying such extraordinary support should be reserved for use during more serious trouble. The bank decided to launch such a program at the meeting and will purchase 20 billion euros ($22 billion) in government and corporate bonds per month in an effort to boost lagging inflation and growth. The purchases drive down market interest rates in an effort to stimulate business borrowing and activity.
Lautenschlaeger is from Germany, where the ECB’s stimulus policies have been criticized for propping up less financially solid governments and depriving savers of interest earnings. The Bild newspaper portrayed Draghi afterward with vampire fangs and a headline that said, “Count Draghila drains our bank accounts dry.” Draghi has said that the bank’s record low interest rates and bond purchases have helped create 11 million new jobs as the eurozone rebounded from a crisis over too much government and bank debt. Eurozone growth has slowed amid uncertainty caused by the U.S.-China trade conflict.
Although Draghi was able to produce a majority on the 25-member rate-setting council at the meeting, several members have come out against the stimulus package, including Jens Weidmann, head of Germany’s national central bank, the Bundesbank, and Klaas Knot, head of the Netherlands central bank. Nineteen national central bank heads join the six executive board members to form the rate-setting council.
Extensive dissent by ECB board members is regarded as a hindrance to the bank successfully carrying out its policies because it can raise market doubts about whether the ECB has the unity needed to stay the course.
Two top German officials, Axel Weber and Juergen Stark, resigned from the ECB in 2011 over disagreements about stimulus policy. Lautenschlaeger is almost certain to be replaced by a German due to an informal understanding among EU governments that Germany always has one seat on the six-member executive board that runs the bank day to day from its Frankfurt, Germany headquarters.
ECB watchers immediately started trying to interpret the change in one of Europe’s most powerful economic posts. Carsten Brzeski, chief economist for ING Germany, said that while a reason was not given, “Lautenschlaeger has been the most vocal and often the only member of the executive board to criticize the ECB’s bond purchases.”
“While to some extent dissenting views can be seen as another step toward becoming a mature central bank, the fact that the opposition against the last policy decision has become very vocal even after the decision shows how fragile the ECB currently is,” Brzeski said.
The ECB sets monetary policy for the 19 countries that use the euro currency.