E ECB Draghi Defends Monetary Policy Against Dutch Lawmakers

Mario Draghi, the President of the European Central Bank, defended the central bank's aggressive easing measures to a very skeptical Dutch parliament last week. During his visit to The Hague, the ECB's monetary policies came under scrutiny, as the Netherlands, alongside Germany mount pressure on the ECB to change the direction of the central bank’s policies.

Testifying to Dutch lawmakers, Mr. Draghi's visit comes at a time when the ECB has already stepped up its policy tightening and is contemplating on further tapering its 60 billion euro a month bond purchase program or quantitative easing as it is known. The current scope of purchases is expected to run until the end of December.

It is reported that Mr. Draghi spent nearly two hours at the Dutch parliament as lawmakers probed the European Central Bank on its transparency policies and of course the monetary policies, which some lawmakers said harmed the Dutch pensioners while subsidizing southern Europe.

Draghi comes under attack by Dutch lawmakers

One particular politician, Pieter Omtzigt was very vocal against the ECB and its policies, questioning at one point whether the QE was required despite the central bank buying government debt that amounts to EUR2.5 trillion by the end of the year.

Another MP quipped that the ECB’s policies might have made Draghi a hero in Southern Europe but not in Holland, to which Mr. Draghi responded that it was not his job to be a hero but only to pursue the ECB’s mandate.

He also questioned Draghi on what would happen if a Eurozone member country wanted to restructure its debt, to which Draghi replied that there was no point to speculate on things that have no chance of happening.

The ECB President said that he was aware on the negative effects of the ultra-loose monetary policy but insisted that the downsides were limited and noted that the ECB's policies have helped to support households in the Netherlands as well. "As an export-oriented country, the Netherlands is currently benefiting from the recovery in other euro area countries," Draghi said about the monetary policy and the positive effects it had in Netherlands.

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