ECB adjusts to new life as public enemy number one

When a 21-year old German philosophy student last week leapt up and doused the most powerful man in Europe with confetti, her eyes were fixed on his face.

"He raised his hands and looked very shocked," Josephine Witt told the Financial Times. "I was glad to see that at that precise moment he saw his actions actually have a consequence on people's lives."

As the head of the European Central Bank, Mario Draghi's actions reverberate across a currency area of more than 300m people that remains in existential crisis.

Fears of a Greek debt default continue to call into question whether the euro area can survive in its current form. The catastrophic social situation in Greece , where unemployment stood at 26 per cent at the end of last year, and other parts of the region's periphery has undermined European unity and is increasingly stoking popular anger, including against the ECB.

"The ECB is a strange target because they're the ones trying to stimulate the economy," said Leif Pagrotsky, a Swedish Social Democratic politician who has written about the problems facing the EU. "But they also present themselves as a technocratic institution, making decisions based on scientific formula, when they are involved in political decisions."

Ms Witt's calls to "end the ECB dictatorship", made at one of the central bank's regular press conferences, mark a shift from an era when officials were shielded from publicity and took decisions behind closed doors, often at governments' behest.

Independence to set interest rates forced central banks to open up, but it is the global financial crisis that has thrust them into the spotlight. While their response to the crash has won praise in some quarters, it has also led to accusations these unelected technocrat have strayed into the domain of politics.

Some credit Mr Draghi with stopping the euro area from breaking up already. The ECB president pledged in the summer of 2012 to do "whatever it takes" to save the euro by buying potentially unlimited quantities of government bonds. The so-called Outright Monetary Transactions programme soothed investors' nerves in financial markets and crucially lowered borrowing costs for crisis-hit governments.

This year, the ECB unleashed a landmark €1.1tn quantitative easing programme, which - along with cheaper oil and a weaker euro - has boosted hopes of recovery.

Those actions have provoked fierce criticism from a German establishment historically wary of stoking inflation.

Hans-Werner Sinn, head of the Munich-based Ifo think tank, said: "The ECB has overstepped its mandate with OMT, which is a form of selective support for some eurozone countries via the printing press."

Rage against the technocrats At the same time as it stands accused of doing too much, the ECB is now increasingly finding itself in the firing line of anti-austerity protests.

Ms Witt's rush on Mr Draghi, which she says was motivated by the ECB president being unaware of the consequences of his actions, is only the latest attack.

Her confetti-bomb comes after thousands of people last month blockaded the ECB's new €1.3bn headquarters under the banner of the Blockupy movement to protest against the central bank's involvement, alongside the International Monetary Fund and the European Commission, in the troika that has set the terms of bailouts to Greece and other crisis-hit member states.

Among the most resonant criticism of the activists is that the region's crisis has left national politicians powerless as officials in Frankfurt, Brussels and Washington DC enforce policies.

Thomas Occupy, a spokesperson for the Blockupy group, said: "The troika is interfering with the independence of the country."

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Mr Draghi says the ECB's approach towards Greece has been dictated by its rules, not politics. Other senior officials have expressed unease at the central bank's involvement in the troika.

But others view demands by Jean-Claude Trichet, the man Mr Draghi succeeded, for Dublin to sign up to an IMF rescue package or face cuts to ECB funding as evidence of an institution willing to overstep its mandate.

"Throughout the crisis we've seen the ECB change its rules when it wants to. Clearly politics come into it," said Philippe Legrain, ?a visiting senior fellow at the European Institute at the London School of Economics. "Trichet's letter to Ireland goes well beyond what a central bank should be doing. It's blackmail basically."

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