Euro Cheddar

German Logo of the ECB. (Photo credit: Wikipedia)

CNN recently ran an interesting article on the European Central Bank’s caught-in-a-corner predicament. As ECB President Mario Draghi spoke in Slovakia, he assured listeners, and the press, that his institution would “do whatever it takes” to further help ailing eurozone economies. But, as opposed to a year ago, no one is really listening or believing that ECB action will help nations like Spain and Greece – both with around 27% unemployment. Why is a rescue plan being met with derision now? One analyst, Mujtaba Rahman, head of research firm Eurasia Group’s Europe practice, was quoted in the article saying that any help from the Central Bank just leads to internal laziness for nations’ trying to implement effective reforms and austerity measures: ‘Rahman added the ECB may be reluctant to announce new support measures because it breeds inertia among politicians looking to push through changes, such as a banking union, needed to bring Europe closer together “The wind has gone out of the sails on banking union. Once you announce intervention, you remove the incentive for countries to put the necessary structures in place.”’

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