Central Banking Deflowered
After the ECB announced on May 9 that it would buy the government bonds of Mediterranean countries experiencing severe fiscal strains, critics complained that the Bank had “lost its virginity.” But, whether they like it or not, central banks' responsibility has always extended far beyond merely ensuring price stability.
FLORENCE – After the European Central Bank announced on May 9 that it would buy the government bonds of Mediterranean countries experiencing severe fiscal strains, critics complained that the Bank had “lost its virginity.” The actions looked like a clear contravention of Article 21 of the ECB’s Statute, which forbids credit facilities to governments or to European Union institutions.