The Empire Strikes Back: The former central bankers' memorandum omits three major ECB successes, according to Mario Draghi's predecessor, Jean-Claude Trichet.

Ihave read the memorandum on the ECB's Monetary Policy, signed by former central bankers (TIE, p. 35). Such a memorandum appears as a definitive condemnation of the monetary policy pursued by the ECB. Being myself a former central banker, as Governor of Banque de France and President of the ECB, I do not share at all the negative views expressed by my former colleagues.

It is not that I am against debates. On the contrary, I have always praised monetary policy debates and discussions. I have always thought that the Governing Council of the ECB is the place where different visions, opinions, and recommendations have to be confronted. This is true for all central banks and certainly appropriate in the case of the ECB, which is issuing a currency for an entire continent and for nineteen countries.

That being said, the memorandum is not only incorrect in its criticism of the monetary policy, but it also omits three major successes of the ECB.

* First, there is no recognition--or even mention--of the fact that the ECB, over its twenty years of existence has delivered price stability, its Treaty primary mandate, not only as well as its best performing predecessor national central banks--which was the legal and political promise at its inception--but even significantly better. Average yearly inflation of the euro area is around 1.7 percent since 1999, while the average yearly inflation of the most credible former national currencies, over the forty years before the euro, was around 2.9 percent. This is a remarkable success that was considered impossible to attain and should put to rest the fears of those, including signatories of the memorandum, who thought that the introduction of the euro would put price stability at risk.

* Second, one cannot ignore that the ECB, like all central banks of the advanced economies, had to cope with the worst financial and economic crisis since World War II, starting in 2007 with the subprime meltdown. This called in 2007-2009 for very bold and difficult to take decisions, including the generalization at ECB auctions of full allotment of liquidity without limit, which is still in place. Starting at the end of 2009, the crisis morphed into a sovereign risk crisis and its epicentre moved to the euro area. New, extremely bold decisions had to be taken under my presidency, including the start of the purchases of Treasuries of Greece, Ireland, and Portugal in 2010, and then of Spain and Italy in 2011 (Securities Market Program, SMP). The memorandum signed by former colleagues is implicitly condemning also those decisions, which were taken during the present "decade." It seems that only the decisions taken more than "a decade ago" are acceptable for that memorandum. I am not surprised because indeed, at the time, I had, sadly, to see two of my colleagues resigning after the Governing Council took, against their vote, these difficult decisions. I believe that the Governing Council of the ECB took the right decision when it approved the SMP and I also believe that it was...

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