The European Central Bank has done its bit to fight the financial crisis by keeping the money market afloat and cutting interest rates. But its powers are limited, and its efforts risk being undermined by the chaotic, confused response of EU governments to the turmoil over the last week. European Central Bank President Jean-Claude Trichet can dictate monetary policy, but he cannot control the disposal of taypayers' money needed to solve the financial crisis. The European Central Bank joined the United States Federal Reserve and other major central banks in cutting key interest rates by half a point on Wednesday in a concerted move to stabilize financial markets and avert recession, but the ECB's power to stem the financial crisis in Europe is limited, economists say. The cut brought key interest rates down to 3.75 percent in the euro zone and to 1.5 percent in the United States, the banks said in a surprise announcement that followed a dramatic slump in world financial markets this week. The Bank of England also cut its key rate by half a point. It was the ECB's first rate cut in more than five years and the move echoed the coordinated rate cuts on Sept. 17, 2001 in the aftermath of the 9/11 attacks.
The European Central Bank has done its bit to fight the financial crisis by keeping the money market afloat and cutting interest rates. But its powers are limited, and its efforts risk being undermined by the chaotic, confused response of EU governments to the turmoil over the last week.
European Central Bank President Jean-Claude Trichet can dictate monetary policy, but he cannot control the disposal of taypayers' money needed to solve the financial crisis.
The European Central Bank joined the United States Federal Reserve and other major central banks in cutting key interest rates by half a point on Wednesday in a concerted move to stabilize financial markets and avert recession, but the ECB's power to stem the financial crisis in Europe is limited, economists say.
The cut brought key interest rates down to 3.75 percent in the euro zone and to 1.5 percent in the United States, the banks said in a surprise announcement that followed a dramatic slump in world financial markets this week. The Bank of England also cut its key rate by half a point.
It was the ECB's first rate cut in more than five years and the move echoed the coordinated rate cuts on Sept. 17, 2001 in the aftermath of the 9/11 attacks.
It's not for lack of institutions and ways to coordinate them that the EU hasn't "solved the crisis like the Fed has done" (LOL!) A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
