“Nothing is possible without people. Nothing is lasting without institutions,” noted Jean Monnet, one of the European Union’s founding fathers.
The ECB is unique in that it has no political overlord or fiscal counterpart. Its independence is enshrined by treaty, the closest the EU has to a constitution.
During covid-19 and under Christine Lagarde the ECB bought $2trn in public debts to arrest doubts about governments’ liquidity.
She followed this up by announcing another bond-buying programme last year, when inflation threatened to send interest rates on Italian bonds soaring.
In all but name the ECB has become the lender of last resort to euro-zone governments.
The bank is at pains to stress that its bond-buying programmes come with strings attached. Indeed, in order to sidestep the treaty’s ban on financing governments, officials must combine a monetary-policy justification with adherence to the EU’s fiscal rules and the need for sustainable debt.
Perhaps aware of its political power, countries are nominating politicians to the ECB’s governing council. The president herself was previously France’s finance minister; Luis de Guindos, the bank’s vice-president, was Spain’s.
The Economist 13 September 2023