Reuters International

European Central Bank (ECB) President Mario Draghi speaks during a news conference at the ECB headquarters in Frankfurt, Germany, April 21, 2016. REUTERS/Ralph Orlowski


BERLIN (Reuters) - Germany's Social Democrats (SPD), a partner in the ruling coalition, called on Tuesday for European Central Bank President Mario Draghi to urgently meet German lawmakers to defuse tension after he knocked back their criticism of monetary policy.

Some officials in Germany's ruling parties have been arguing that the ECB's ultra easy monetary policy is eroding the savings of thrifty Germans and putting their vast banking system at risk on eroding bank margins.

The relationship between Europe's largest economy and the ECB soured further when Finance Minister Wolfgang Schaeuble blamed the ECB's policies for the recent rise of a right-wing anti-immigration party, Alternative for Germany.

Draghi hit back last week, arguing that excessive criticism of the bank endangered its independence and erodes the effectiveness of monetary policy.

The deputy leader of the SPD's parliamentary group said Draghi should urgently appear before the Bundestag to discuss the issue with lawmakers.

"The SPD insists that we should quickly meet with Mr Draghi," Axel Schaefer said in a statement. "The impression that Germany is questioning the independence of the ECB should be dispelled."

Merkel last week argued that criticism of ECB policies was legitimate and should not be confused with interference. Germany fully supports the ECB's independence, she said.

The ECB declined to comment, although a source familiar with the matter said Draghi had yet to receive a formal invitation.

A testimony at the Bundestag would not be unprecedented. Draghi appeared before a joint committee hearing in 2012 to defend the ECB's Outright Monetary Transactions programme, a bond-buying scheme challenged in court by German interest groups.

ECB rates have been negative for over a year and could go even lower as the bank fights ultra low inflation, sluggish growth and weak investment.

With inflation already below target for three straight years, the ECB unveiled fresh stimulus measures in December and March, both times to the objection of Germany.

This has hurt hundreds of Germany's small savings banks, which relied on healthy rates to generate earnings.

(Reporting by Matthias Sobolewski and Holger Hansen; Writing by Balazs Koranyi; Editing by Raissa Kasolowsky)


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