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'ECB subsidy for banks and multinationals is madness’

10 May 2017

'ECB subsidy for banks and multinationals is madness’

Why does the European Central Bank pump a cool €60bn per month in debt securities into banks and corporations when that money does not go straight into the economy? That was the most important question from SP Member of Parliament Renske Leijten to the ECB president, the Italian former investment banker Mario Draghi. Draghi is today visiting the Dutch Parliament on the initiative of the SP.

The fact that multinationals profit most from ECB policies is something Leijten finds galling. “The ECB buys bonds from companies such as Achmea, Gasunie, Heineken and Shell,” she explains. “That’s the purest subsidy to multinationals, which certainly don’t need the money and moreover don’t invest it! It’s really hard to explain why the europhiles have for years called for austerity when now we have tens of billions per month handed over to profit-making and polluting corporations.”

Leijten also wants Draghi to explain why the ECB is keeping interest rates low. This ill-conceived policy is leading to a misdirected redistribution of income between labour and capital. “Pensioners are losing out because pension funds have to count themselves as poor as people’s savings are worth ever less,” she says. “At the same time high-risk investors and the wealthy are gaining, and inequality and the chance of more financial bubbles are growing fast.”

In the SP’s view the ECB itself should look critically at its mandate. Buying up of bonds from governments is, as things stand, for example, not possible, despite this being a way of directly stimulating the economy. Another possibility would be to pay the cash directly into people’s bank accounts in what is sometimes called ‘helicopter money’.

Leijten also wants Draghi and the ECB’s top officials to make their appointment diaries public. “We need to know who the head of the ECB, which distributes a total of €60bn per month - €80bn until recently – is talking to,” she explains. “I’m curious to know what Draghi thinks of my proposal.”

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