Monday, June 13, 2011

Is the ECB trying to Break the Eurozone?

David Beckworth wonders why the Frankfurt bank is tightening monetary policy, thus increasing the fragility of southern members’ banking systems and the burden of adjustment for Greece, Portugal and Spain.

Now most commentators have been (finally) recognizing the obvious: the zone is not an optimal one and specific (and often diverging) monetary policies are required for different members. But the ECB responds only to the German economy’s conditions. Do they really want to get rid of the Eurozone periphery (maybe with the blessing of the German government)? An hypothesis not to be lightly discarded.

Read the post here

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