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European Bankers Accuse European Central Bank Head Draghi of Inflating the Bubble

Sept. 8, 2017 (EIRNS)—If the head of Deutsche Bank, which is sitting on a pile of €50 trillion derivative bets, says the European Central Bank (ECB) should raise interest rates, then the situation is quite serious. Deutsche Bank CEO John Cryan accused the ECB of inflating a speculative bubble with its cheap money policy. "We are now seeing signs of bubbles in more and more parts of the capital market where we wouldn’t have expected them," Cryan said in an interview with Bloomberg, and blaming the interest-rate policy as being partly responsible for the decline in earnings at European banks.

The ECB policy was criticized also at a bankers’ meeting yesterday in Frankfurt, headquarters of the ECB, where many asked for an end to the cheap money policy. German saving banks president Georg Fahrenschon demanded the ECB should stop "resubmitting again and again" (auf wiedervorlage setzten), and expressed the hope that the ECB would "start in small steps" to normalize rates.

The head of Credit Unions and Raiffeisen banks (BVR) Uwe Fröhlich said that for the roughly 1,000 members of his association of cooperative banks, "it is clear that the ECB is going over the edge."

German Finance Minister Wolfgang Schäuble told the Frankfurt meeting that the ECB policy had helped to overcome the crisis, but it is now no longer required. "And therefore everyone in the world would like that possibly soon, we should go back to normalization."

Also Isabel Schnabel (Wirtschaftsweise), Joerg Krämer (Commerzbank) and Axel Weber (UBS) said the longer it takes, the more difficult a tapering will be.