The ECB’s Political Overreach
The European Central Bank’s new Transmission Protection Instrument is as ambitious as it is risky. Not only does it involve the central bank in tasks that lie far outside its remit, but it has also been unveiled at a time when monetary policymakers should be focused squarely on maintaining price stability.
FRANKFURT – In mid-June, as the yield on Italian ten-year bonds was rising to around 250 basis points above that of German bonds, the European Central Bank felt it necessary to hold a special Governing Council meeting to announce accelerating work on a new “anti-fragmentation” measure. And now, it has unveiled the fruit of its effort.