The Wall Street Journal - 11.09.2019

A10| Wednesday, September 11, 2019 THE WALL STREET JOURNAL.

WORLD NEWS

EU Competition Chief Gets Second Term

Reappointment of

Vestager signals that

Brussels isn’t likely to

relax big-tech scrutiny

EU Competition Commissioner Margrethe Vestager will take on an influential new role in shaping legislation for digital companies.

FRANCISCO SECO/ASSOCIATED PRESS

Expanded Role for

Danish Politician

Born: April 13, 1968, in

Glostrup, Denmark

Background: Danish politician,

including a stint as Denmark’s

economics minister

Old job: European Commis-

sion competition chief, in

charge of anticompetition pol-

icy and enforcement

New job: She has been nomi-

nated for five more years, in

addition to taking on a new

role as executive deputy in

charge of the digital economy.

Education: Studied economics

at the University of Copenha-

gen

Career milestone: She is

the first competition

commissioner to be nomi-

nated for a second term and

have her tasks extended to

new regulation in the digital

sector.

policies held together the frac-

tious currency union during

the sovereign-debt crisis.

Still, the Italian, who has

just two policy meetings left,

can usually count on support

from a majority of dovish

council members, and some

skeptics don’t have a vote at

this week’s meeting, including

Mr. Villeroy de Galhau.

Investors are pricing in a

roughly 50% chance of a 0.

percentage-point rate cut, as

well as a program to buy

about €30 billion to €40 bil-

lion of sovereign debt a

month. As a compromise, Mr.

Draghi could restart the bond-

buying program, but at

a slower pace, leaving its cur-

rent restrictions in place.

He could also leave the deci-

sion to restart bond buying to

International Monetary Fund

Managing Director Christine

Lagarde, who is set to take the

ECB presidency on Nov. 1. Ms.

Lagarde said last week that she

would reassess the costs and

benefits of the ECB’s contro-

versial policy tools.

Mr. Draghi’s defenders say it

is easier to combat a downturn

before it has taken root than to

reverse it afterward. New fac-

tory orders in Germany fell

sharply in July, while Italy’s

economy has flatlined.

“If you don’t do anything

then you don’t have any side

effects, but you don’t have any

impact on the economy, ei-

ther,” Olli Rehn, head of Fin-

land’s central bank and a

member of the ECB’s rate-set-

ting committee, said in a re-

cent interview. He called on

the ECB to launch a broad

package of stimulus measures,

including substantial new

bond purchases.

The fresh uncertainty over

ECB policy underscores the

political and economic chal-

lenges facing central bankers

in responding to the global

slowdown that has followed

the China-U.S. trade war.

The Federal Reserve is cut-

ting rates. Unlike the ECB,

however, the Fed raised inter-

est rates during the expansion,

giving it more ammunition to

fight a downturn.

The eurozone is especially

reliant on loose monetary pol-

icy, as it is highly dependent on

trade for growth. Germany ac-

counts for the same share of

world exports as the U.S. with

just a quarter of the popula-

tion.The weakening of the euro

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Bond-buyingend QErestart

Italy's 10-year bond yields

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ECBsignals:

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triggeredsharpswingsinItalianbondsandtheeuro.

year, as well as with upgrading

the bloc’s liability and safety

rules for digital platforms.

Ms. Vestager was one of the

senior officials floated for the

commission’s top job, as a lead

candidate from the broad fam-

ily of European centrist politi-

cians championed by French

President Emmanuel Macron.

Her promotion to commission

vice president was part of the

July deal in which Mr. Macron

secured support for Mrs. Von

der Leyen.

Ms. Vestager was expected

to hand over the competition

role, which comes with re-

sponsibilities for investigating

and enforcing antitrust issues,

including through hefty fines,

as she ascended to a higher

post in the commission. It is

very rare for commissioners

who stay on to keep the same

portfolio. The competition

commissioner has historically

been kept clear of other policy

areas, so as not to influence

antitrust decisions.

In an interview, Ms. Ve-

stager said she would main-

tain the independence of the

antitrust division. “With the

more horizontal responsibility,

I will make sure the integrity

of our procedures and inde-

pendence in the law enforce-

ment is nonnegotiable.” She

said the commission would fo-

cus on enforcing the bloc’s

data-protection regime to en-

sure that users are in control

of their data and on enabling

businesses in Europe to share

and use data for innovation.

Ms. Vestager made a name

for herself by imposing record

antitrust fines on U.S. tech

companies, including a total of

$9.4 billion on Alphabet Inc.’s

Google. She also ordered Ire-

land to claw back $15 billion

from Apple in what the com-

mission called unpaid taxes.

The Obama administration

took aim at Ms. Vestager, say-

ing her approach to tech regu-

lation slanted against U.S.

firms, an accusation European

officials have denied.

The unit she has led for the

past five years has also pur-

sued high-profile probes

against Amazon.com Inc.,

Facebook Inc. and Qualcomm

Inc., as well as nontech Ameri-

can giants like McDonald’s

Corp., Fiat Chrysler Automo-

biles NV and Starbucks Corp.

Ms. Vestager has drawn vit-

riol from Washington for

years. As U.S. officials pile in

with their scrutiny of Silicon

Valley, some American politi-

cians, including Mr. Trump,

have accused her of trespass-

ing on Washington’s regula-

tory turf. In June, Mr. Trump

told Fox Business Network

that Ms. Vestager “hates the

United States perhaps worse

than any person I’ve ever

met.” He said “she’s suing all

our companies. We should be

suing Google and Facebook,

and perhaps we will.”

Ms. Vestager has denied

that she is targeting U.S. com-

panies for their nationality.

The 51-year-old Dane, who

officials say often pulls out

her knitting during discus-

sions, first rose to prominence

as an economy minister in

Denmark. An economist by

training and a skilled naviga-

tor of Denmark’s multiparty

system, Ms. Vestager was the

inspiration for a political TV

drama series in her home

country. As a commissioner,

her no-frills demeanor and her

colorful, in part self-sown,

wardrobe helped her stand out

in the Brussels officialdom.

Industry watchers warned

tech giants to brace for more

European scrutiny under Ms.

Vestager.

The commission’s focus on

“digital giants is set to

sharpen further,” said Alexi

Dimitriou, competition counsel

at Ashurst, a multinational law

firm. “With her remit also ex-

panding to coordinating wider

digital policies, digital busi-

ness should expect regulatory

intensity to continue,” he said.

BRUSSELS—The European
Union official overseeing the
regulatory push against Silicon
Valley is poised to stay on the
job for an unexpected second
term—a warning that the new
administration isn’t backing
down on global tech oversight.
Incoming European Com-
mission President Ursula von
der Leyen’s decision to keep
Margrethe Vestager as the
competition chief—while also
giving her a wider portfolio to
guide European rule-making
related to the digital econ-
omy—was met by audible
gasps from staffers and jour-
nalists at a news conference
Tuesday. Ms. Vestager had
been widely expected to take a
more senior role and leave the
day-to-day business of anti-
trust probes and enforcement
to a new official.
The reappointment of Ms.
Vestager, whom President
Trump labeled the “tax lady”
after her ruling to collect from
Apple Inc. what the commis-
sion said was back taxes,
punctuates Mrs. Von der
Leyen’s push to be more asser-
tive with economic and com-
mercial competition from the
U.S. and China.
Mrs. Von der Leyen said she
kept Ms. Vestager on because
of outstanding performance in
her first term and since, in her
view, competition is “closely
linked to the digital sector.”
Ms. Vestager is slated to
become one of Mrs. Von der
Leyen’s three executive depu-
ties, or vice presidents, pro-
viding her with extra clout in
commission deliberations. Her
office is tasked with shepherd-
ing new regulation on artifi-
cial intelligence by early next

BYVALENTINAPOP
ANDROCHELLETOPLENSKY

NEW YORK—Major central

banks still have the ability to

respond to a normal economic

downturn, Bank of England

Gov. Mark Carney said Tues-

day, but they would likely

need some help from govern-

ment spending and taxation

policies if trouble did happen.

The possibility of a slow-

down “has gone up” around

the world and downside risks

to the outlook have increased,

Mr. Carney said at the Council

on Foreign Relations in New

York. Should such a slowdown

turn into something so signifi-

cant that the world’s major

central banks were called into

an aggressive response, Mr.

Carney said, “Do we have the

tools [to respond]? ... Yes, we

have the tools.”

Changes in economies and

the financial system in the

wake of the financial crisis a

decade ago have left the gen-

eral level of interest rates

lower than it once was.

As a result, central banks

have less room to stimulate

economies by lowering short-

term interest rates. When the

next downturn arrives, central

banks are likely to have to turn

to unconventional policies, such

as guidance over the future

path of rates and bond buying.

In this environment, Mr.

Carney notes, the Fed—with

the highest level of short-term

rates relative to other top cen-

tral banks—has the most

space to act, followed by the

Bank of England and then the

European Central Bank.

Mr. Carney also said that

even with very high levels of

government borrowing, major

nations including the U.S. still

have capacity to borrow and

spend more to help stimulate

growth in times of trouble, al-

though he noted this ability to

borrow is “not unlimited.”

Mr. Carney addressed tur-

bulent conditions in the U.K.

He noted that already the U.K.

pound is seeing very high levels

of volatility tied to what is hap-

pening around Brexit. Mr. Car-

ney said, “The core of the finan-

cial system is ready for Brexit.”

BYMICHAELS.DERBY

BOE Head:

Banks Can

Handle the

Next Crisis

in response to easy money has

given exporters a much-needed

boost.

At the same time, eurozone

governments have been un-

willing or unable to loosen

purse strings to stave off a

slowdown.

The recovery that Mr.

Draghi’s bold policies helped

engineer is now at risk, with

the region’s economy grow-

ing at an annualized pace

of just 0.8% in the second

quarter and its manufacturing

sector in recession.

However, the services sec-

tor, which accounts for two-

thirds of eurozone output, is

resilient, and unemployment is

at an 11-year low.

“I find myself surprisingly

skeptical, probably for the

first time,” Stefan Gerlach, a

former deputy governor of Ire-

land’s central bank, said in an

interview. “Draghi does not

seem to hesitate to bind the

hands of his successor. I’m not

sure the economy needs it. I’m

not sure it achieves much.

Some of the arguments the

hawks are making sound sen-

sible.”

As part of a new bond-buy-

ing program, Mr. Draghi has

suggested that the ECB could

loosen self-imposed rules

aimed at ensuring it doesn’t

dominate debt markets.

That would trigger opposi-

tion in Germany. German Fi-

nance Minister Olaf Scholz said

last month that he would look

into outlawing negative inter-

est rates for retail depositors.

The ECB might also intro-

duce measures to protect eu-

rozone banks against even

more negative interest

rates. Banks bear the brunt of

the policies since they need to

keep money on deposit with

the central bank, in essence

paying the ECB to store their

money. Meanwhile, banks have

been unable to pass those

costs fully on to depositors,

who often still receive 0% on

savings accounts. The ECB

might provide banks some re-

lief by exempting some bank

deposits with the ECB from

negative rates.

“We are at the end of the

efficiency of monetary policy,”

France’s finance minister,

Bruno Le Maire, said.

With political pressure ris-

ing on central bankers around

the world, Mr. Draghi may

want to leave Ms. Lagarde

room to maneuver.

FRANKFURT—European
Central Bank President Mario
Draghi hopes to end his eight-
year term with a bang. Some
fear it could conclude with a
fizzle.
In the run-up to his depar-
ture on Oct. 31, the central
banker has signaled plans for a
large, final burst of monetary
stimulus to prop up a eurozone
economy that is tottering under
the pressure of trade tensions.
But critical voices are multi-
plying, including a growing
number from the ECB’s 25-
member rate-setting committee.
Mr. Draghi’s critics say the
eurozone economy isn’t weak
enough to warrant aggres-
sive new measures just a year
after the ECB began phasing
out its €2.6 trillion ($2.87 tril-
lion) bond-buying program.
Borrowing costs for house-
holds, businesses and govern-
ments are so low, they argue,
that easier money will have lit-
tle effect. The bank’s key inter-
est rate is already minus 0.4%.
They also say the measures
Mr. Draghi has flagged—further
interest-rates cuts and a new
bond-buying program, known
as quantitative easing, or QE—
risk leaving the bank with vir-
tually no ammunition if the
economy sinks further, while
also exacerbating the risk of as-
set bubbles and damage to the
region’s banks. Several euro-
zone governments moved in re-
cent months to rein in excess
lending, including France.
“The ECB’s monetary policy
is doing its duty, but it can’t
do everything, and it certainly
can’t perform miracles,” Bank
of France Gov. François Ville-
roy de Galhau said in a recent
interview with Swiss media.
The French banker has
joined traditional hawks in
Germany and other Northern
European countries in ques-
tioning Mr. Draghi’s bold stim-
ulus plans, especially QE.
“With a second asset-pur-
chase program, the ECB will
continue disturbing markets,
and prices do not reflect the
risk anymore,” said Jürgen
Stark, the ECB’s former chief
economist. “All this is not
thought through, just to be ac-
tivist and show we are not at
the end of our toolbox.”
Those objections raise the
prospect of a rare defeat at
Thursday’s ECB meeting for
Mr. Draghi, whose bold new

BYTOMFAIRLESS

Opposition Mounts to Draghi’s Easing Plans

The recovery that European Central Bank head Mario Draghi’s policies helped engineer is at risk.

ALEX KRAUS/BLOOMBERG NEWS