ECB Limitations in Addressing Eurozone Crisis

November 4, 2011

ECB Limitations in Addressing Eurozone Crisis
Explainer Video
from Video

More on:

Europe

Economic Crises

Monetary Policy

CFR’s Benn Steil discusses the ECB’s role and limitations in mitigating the eurozone debt crisis. Steil says European Central Bank President Mario Draghi’s statement that the ECB will not act as a lender of last resort to governments may come back to haunt him. "If the markets are concerned that the ECB will not at least provide a political backstop for the eurozone leadership" he cautions, "that could lead to a total boycott of Spanish and Italian government debt, which could be a catastrophe." However, Steil emphasizes the ECB’s limitations in solving the eurozone crisis. "Although the ECB does have a lot of ammunition in that it can print money, it doesn’t have unlimited ammunition," he says. "The European Central Bank is not a power of its own that can manufacture a solution to this debt crisis. It will take leadership in Europe, it will take contributions, further contributions, from the German taxpayer."

More on:

Europe

Economic Crises

Monetary Policy

Up
Close

Top Stories on CFR

Hungary

The European Parliament’s vote to reprimand Hungary over its growing authoritarianism has tested the EU’s readiness to stand up to illiberalism within the bloc.

United Nations General Assembly

Next week Donald J. Trump returns to the United Nations for the annual opening of the UN General Assembly. While Trump exceeded expectations during his first UN appearance last year, he will face more pushback this time around. The president will encounter a more skeptical global audience, woke to the reality that his administration's diplomacy is all take and no give.

South Korea

South Korea's President Moon Jae-in has had more success than many expected in Pyongyang for his third summit with North Korea’s Chairman Kim Jong-un.