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The ECB has clearly overshot its mandate. They try to become the most powerful EU institution, above the EC, the Council and the EU Parliament. "The question is," said Humpty Dumpty, "which is to be master - - that's all."
Through the Looking Glass, Chapter 6)

Some points that show this:

  • Lorenzo Bini-Smaghi said in a speech last January: "The experience of recent months has shown that governments tend to take unpopular decisions only under pressure from the markets. Action by the central bank that would eliminate such pressures would risk becoming counterproductive and creating moral hazard. Thus, there is a fine line between the goal of maintaining sufficient pressure on the authorities of the Member States and that of avoiding destabilising market dynamics that ultimately hinder the conduct of monetary policy".
  • Jurgen Stark on the FT, March 31, 2011: "implementing the necessary reforms not only benefits the countries concerned, but is also an obligation for all governments so as to ensure that their economies function smoothly within our monetary union. It is in this sense that one size fits all". This is outrageous. What he actually says is that the ECB doesn't take orders by the governments (central bank independence) but that the governments should more or less take orders indirectly from the ECB.
  • Jean-Claude Trichet said on March he would appeal the commission to the EU Parliament: "I would sum up our own understanding by saying that the Commission did not go far enough. The governments have even weakened the position of the Commission. And, we are counting on the Parliament."

"Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union." David Miliband
by Kostis Papadimitriou on Thu May 19th, 2011 at 07:25:39 AM EST
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