The ECB’s Moment of Decision

LONDON – With the crisis of the eurozone’s periphery having mutated into a crisis of its core, the prescriptions for recovery must change. Fortunately, it is not too late, but an effective response must be immediate, overwhelming, and free of the ideological rivalries that have enfeebled the eurozone since the common currency was launched. The European Central Bank is the only institution that can generate such a response.

The eurozone now faces a classic currency crisis. Inevitably, this crisis – manifested, under a fixed exchange-rate system, through bond spreads – threatens to take down debtors indiscriminately, be they governments, banks, or households.