The ECB’s Lethal Inhibition
Just fourth months after the ECB began pouring liquidity into Europe's banks, matters are again coming to a head as Italy and Spain spiral into recession. The hurdles to further monetary-policy action are high, but they are largely self-imposed, and are placing economic growth and structural reform at risk.
BERKELEY – Last December, with Europe’s financial system on the brink of disaster, the European Central Bank stunned the markets with an unprecedented intervention, offering banks across the eurozone essentially unlimited liquidity against any and all collateral for an exceptional period of three years.