Lagarde takes over as president of European Central Bank

European Central Bank President Christine Lagarde with her predecessor Mario Draghi at a recent farewell event in Frankfurt, Germany. (Reuters)
Updated 02 November 2019

Lagarde takes over as president of European Central Bank

FRANKFURT: Christine Lagarde took over on Friday as president of the European Central Bank, replacing Italy’s Mario Draghi, as the institution has been riven by a return to easy money policies to stoke inflation and ward off recession.

The former French finance minister and International Monetary Fund chief “has today taken up her duties as president of the European Central Bank,” the Frankfurt institution said in a statement.

After three male leaders since the bank opened its doors in 1998, Lagarde is the first woman to hold the president’s seat.

A former corporate lawyer, her path through politics and international organizations has been marked by crisis management, holding the French Finance Ministry from 2007-2011 and the IMF post from 2011-2019.

But she lacks the formal economics qualifications of former guardians of the single currency.

Lagarde takes office at a time when the ECB’s governing council is divided as rarely before over its latest round of monetary stimulus.

From this month, the institution restarts “quantitative easing” (QE) bond purchases of €20 billion ($22.3 billion) per month, on top of historic low interest rates and cheap loans to banks.

Beyond the six executive board members and 19 eurozone central bank governors on the council, Lagarde is also under pressure to better communicate ECB policy with the wider public.

Germans in particular are grumbling at low interest rates’ impact on their savings, with top-selling daily Bild depicting predecessor Draghi as “Count Draghila” saying he was draining accounts.

And as well as steering monetary policy, Lagarde told European lawmakers in September she wanted to dust off jargon-laden central bank communications and support female staff at the ECB and climate action.

She has also urged governments flush with cash, like Germany and the Netherlands, to take some of the burden of stoking growth and inflation off central bankers.

“Countries with chronic budget surpluses like the Netherlands and Germany,” need to increase spending to redress “imbalances” in the eurozone, investing more in infrastructure, education and innovation, she told French broadcaster RTL Wednesday.

New emissions blow for VW as German court backs damages claims

Updated 26 May 2020

New emissions blow for VW as German court backs damages claims

  • Scandal has already cost firm more than €30 billion; ruling serves as template for about 60,000 cases

KARLSRUHE, Germany: Volkswagen must pay compensation to owners of vehicles with rigged diesel engines in Germany, a court ruled on Monday, dealing a fresh blow to the automaker almost 5 years after its emissions scandal erupted.

The ruling by Germany’s highest court for civil disputes, which will allow owners to return vehicles for a partial refund of the purchase price, serves as a template for about 60,000 lawsuits that are still pending with lower German courts.

Volkswagen admitted in September 2015 to cheating in emissions tests on diesel engines, a scandal which has already cost it more than €30 billion ($33 billion) in regulatory fines and vehicle refits, mostly in the US.

US authorities banned the affected cars after the cheat software was discovered, triggering claims for compensation.

But in Europe vehicles remained on the roads, leading Volkswagen to argue compensation claims there were without merit. European authorities instead forced the company to update its engine control software and fined it for fraud and administrative lapses.

Volkswagen said on Monday it would work urgently with motorists on an agreement that would see them hold on to the vehicles for a one-off compensation payment.

It did not give an estimate of how much the ruling by the German federal court, the Bundesgerichtshof (BGH), might cost it.

Volkswagen shares were 0.5 percent lower. The BGH’s presiding judge had signaled earlier this month he saw grounds for compensation.

Costs mount

“The verdict by the BGH draws a final line. It creates clarity on the BGH’s views on the underlying questions in the diesel proceedings for most of the 60,000 cases still pending,” Volkswagen said.

A lower court in the city of Koblenz had previously ruled the owner of a VW Sharan minivan had suffered pre-meditated damage, entitling him to reimbursement minus a discount for the mileage the motorist had already
benefited from.

The court at the time said he should be awarded €25,600 for the used-car purchase he made for €31,500 in 2014.

“We have in principle confirmed the verdict from the Koblenz upper regional court,” said BGH presiding federal judge Stephan Seiters.

Volkswagen had petitioned for the ruling to be quashed altogether by the higher court, while the plaintiff had appealed to have the deduction removed.

A Volkswagen spokesman said that outside Germany, more than 100,000 claims for damages were still pending, of which 90,000 cases were in Britain.

The carmaker also said it had paid out a total of €750 million to more than 200,000 separate claimants in Germany who had opted against individual claims and instead joined a class action lawsuit brought by a German consumer group.

The carmaker said last month it would set aside a total of 830 million for that deal.

In a separate court, Volkswagen agreed last week to pay €9 million to end proceedings against its chairman and chief executive, who were accused of withholding market-moving information before the emissions scandal came to light.