The palace revolution at the European Central Bank is a systemic event for global finance

The New Keynsesian ascendancy of the Draghi years has been overthrown, with large implications for the political economy of the euro project and the debt sustainability of Italy.

Scorched-earth hawks at the German Bundesbank have regained control over the policy machinery after a decade in opposition, ending the North-South truce that has held the euro together for the last decade.

The de facto leader of the ECB at this juncture is Isabel Schnabel, the German board member of the executive council, who has returned to Ordoliberal orthodoxy after a fling with easy money that provoked a torrent of criticism in Germany, and that she now regrets.

Ambrose Evans-Pritchard Telegraph 20 December 2022


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