stark8_ Arne Dedertpicture alliance via Getty Images_ecb Arne Dedertpicture alliance via Getty Images

The ECB's Existential Dilemma

For years, the European Central Bank has been succumbing to political interests and pursuing objectives beyond the scope of its primary mandate: maintaining price stability. But now that inflationary pressures are building, the ECB’s credibility is on the line.

FRANKFURT – Our fiat money regime requires an institutional anchor that credibly and decisively ensures a stable price level and long-term confidence in the euro. Credibility is a central bank’s greatest asset, because it underwrites confidence in the purchasing power of money. And credibility, in turn, rests on the central bank’s independence from political influence, and on its commitment to monetary stability.