Mario Draghi will go down in history as one of the greatest ‘monetary fools’. That’s what former head of the Federal Reserve Bank of Dallas, Richard Fisher, said in an interview with Bloomberg. He expresses his admiration for the Italian, but at the same time he voiced strong criticism regarding his policy. Fisher believes that the experiment with negative interest rates in particular is a big mistake.
“I think that Draghi, whom I personally admire, will go down in history as one of the greatest monetary fools. I like him and I know him, because I spent a lot of time with him at the central bank. He knows how to address the market, but I think negative interest rates was a very bad experiment.”
Negative interest rates
According to the American former central banker, the negative interest rate did not help the European economy. On the contrary, the German economy is still in danger of ending up in recession. Meanwhile, negative interest rates have “decimated” the banking system and put pressure on banks’ profitability, Fisher said.
In October Draghi left the European Central Bank as president of the ECB. In the past eight years he managed to steer the Eurozone through the crisis, but for that he paid a high price. He lowered the interest rate to below zero and bought hundreds of billions of bonds. The bond buying scheme calls into question the independence of the central bank. Moreover, he failed to achieve his inflation target of just under 2%.