A New EU Fiscal Regime Could Make the ECB Truly Independent

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Publication Date June 2022
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The proposed macroeconomic framework sketched in this paper would allow the European Central Bank to raise interest rates to deal with inflation while acting to prevent financial problems in southern Europe through its anti-fragmentation tool. The bank could tighten or loosen monetary policy in a way that it judged would fulfil its inflation mandate, while preventing liquidity problems in some member-states from plunging the eurozone as a whole into crisis. Member-states’ solvency would be achieved by having credible fiscal targets that are founded upon agreement by national governments and the European Commission. And the Commission could police those agreements with a permanent green investment fund that would be disbursed if member-states stuck to them. That fund would also help the EU to achieve emissions targets, energy independence from Russia, and a more secure EU.

Source Link https://www.cer.eu/insights/new-eu-fiscal-regime-could-make-ecb-truly-independent
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  • https://www.cer.eu/sites/default/files/insight_JS_ECB_Fiscal_30.6.22.pdf
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ECB Press Release: 15 June 2022: Statement after the ad hoc meeting of the ECB Governing Council https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.pr220615~2aa3900e0a.en.html

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