‘Count Draghila’ is sucking our accounts dry, says German daily Bild

Draghi has attracted the ire of the German tabloid Bild before. (Shutterstock)
Updated 13 September 2019

‘Count Draghila’ is sucking our accounts dry, says German daily Bild

  • The ECB on Thursday cut interest rates deeper into negative territory and promised bond purchases with no end-date to push borrowing costs even lower

BERLIN: Mass-selling German newspaper Bild on Friday accused European Central Bank president Mario Draghi of “sucking dry” the bank accounts of Germany’s savers, a day after the ECB cut interest rates further.

Next to a photomontage of Draghi with fangs and dressed as a vampire, Bild’s headline read: “Count Draghila is sucking our accounts dry.”

Hoping to kick-start economic activity nearly a decade after the euro zone’s debt crisis, the ECB on Thursday cut interest rates deeper into negative territory and promised bond purchases with no end-date to push borrowing costs even lower.

The bigger-than-expected stimulus immediately fueled concerns among frugal Germans, who have complained for years that the ECB’s low interest rates are denying them a decent rate of return on their savings.

“The horror for German savers goes on and on,” Bild wrote.

The newspaper has taken aim at Draghi before.

During the euro zone crisis, Bild gave the Italian a spiked Prussian helmet from 1871 to show its confidence that he would adhere to German-style discipline. Draghi put the helmet on a shelf in his office.

Voicing Germans’ angst, Helmut Schleweis, president of Germany’s powerful savings banks association, said the ECB’s latest policy package “does more harm than good.”

German Finance Minister Olaf Scholz sought to calm savers worried ahead of Thursday’s ECB meeting.

“Most contracts that customers have with their banks do not currently allow such penalty rates, so the problem is not acute,” Scholz said. “Banks’ boards are wise enough to grasp what they would trigger with such penalty rates.

But Joachim Wuermeling, a board member of Germany’s central bank, the Bundesbank, struck a different tone: “Banks could soon pass on lower interest rates to even more customers,” Wuermeling told Focus magazine.

Nobody should be surprised if banks demanded higher fees and were mulling negative interest rates, Wuermeling said. “It may be necessary from a business and banking supervisory point of view,” he added.

Germans have long looked to the Bundesbank as a pillar of stability and guarantor of a stable currency.

Formed in 1957, the German central bank was a model for central bank independence in the years that followed, but its president is now just one voice on the ECB’s Governing Council.

New Austrian National Bank Governor Robert Holzmann, who also sits on the ECB’s policymaking Council, said the ECB’s policy met “pushback” at a meeting this week.

Asked whether the new measures were a mistake, Holzmann, who has a seat on the ECB Governing Board, told Bloomberg TV: “I’m sure this idea crossed the mind of some people and it definitely crossed my mind.”

Oman’s sultan says government will work to reduce debt

Updated 23 February 2020

Oman’s sultan says government will work to reduce debt

DUBAI: Oman's Sultan Haitham bin Tariq al-Said said on Sunday the government would work to reduce public debt and restructure public institutions and companies to bolster the economy.
Haitham, in his second public speech since assuming power in January, said the government would create a national framework to tackle unemployment while addressing strained public finances.
"We will direct our financial resources in the best way that will guarantee reducing debt and increasing revenues," he said in the televised speech.
"We will also direct all government departments to adopt efficient governance that leads to a balanced, diversified and sustainable economy."
Rated junk by all three major credit rating agencies, Oman's debt to GDP ratio spiked to nearly 60% last year from around 15% in 2015, and could reach 70% by 2022, according to S&P Global Ratings.
The small oil producing country has relied heavily on debt to offset a widening deficit caused by lower crude prices. Also, the late Sultan Qaboos, who ruled Oman for nearly 50 years, held back on austerity measures.
The country has delayed introducing a 5% value added tax from 2019 to 2021, and economic diversification has been slow, with oil and gas accounting for over 70% of government revenues.
Last week, rating agency Fitch said Oman was budgeting for a higher deficit of 8.7% for 2020 despite its expectation of further asset-sale proceeds and some spending cuts.
"We are willing to take the necessary measures to restructure the state's administrative system and its legislation," Haitham said in his first speech since the mourning period for Qaboos ended, without elaborating.
He said there would be a full review of government companies to improve their business performance and competence.
Oman observers have said that if Haitham moves to decentralise power it would signal willingness to improve decision making. Like Qaboos, he holds the positions of finance minister and central bank chairman as well as premier, defence and foreign minister.