Draghi Says ECB Should Examine New Ideas Like MMTBy Fergal O’Brien
23 September 2019
- Says that some recent proposals out there are untested
- Notes many are fiscal policies in the realm of governments
European Central Bank President Mario Draghi said the Governing Council should be open to ideas such as Modern Monetary Theory, while noting they’re closer to fiscal policy and should be directed by governments.
Draghi was responding to a question from European lawmakers about helicopter money and the best ways to channel funds to the economy in a way that helps inequality. He mentioned MMT and a recent paper by former Federal Reserve Vice Chairman Stanley Fischer — the adviser on Draghi’s doctorate — which said central banks should put money “directly in the hands of public and private sector spenders.”
“These are objectively pretty new ideas,” Draghi said. “They have not been discussed by the Governing Council. We should look at them, but they have not been tested.”
He added that such actions rely on decisions on distribution, and that’s not something for monetary policy.
“When you look at them closely, you realize the task of distributing money to one subject or the other subject, that’s typically a fiscal task,” he said. “It’s a government decision, not the central bank…It’s the political governance of these ideas that needs to be addressed.”