The ECB can only overcome the crisis with tougher monetary policy

The European Central Bank (ECB) surprised many with its announcement that it would scale back its bond purchases relatively quickly and possibly end them soon. Apparently the “hawks”, the advocates of a hard monetary policy, have prevailed in the ECB council.

What is overlooked at first glance: With the decision, the central bank has better separated the acute fight against the crisis from actual monetary policy. Because of the high inflation, the ECB cannot continue its bond purchases on a broad basis.

However, it still has instruments to provide targeted support for individual states whose risk premiums are becoming too high and thus endangering stability. So far, these surcharges have been limited, but a new euro crisis, for example as a result of the war in Ukraine, is by no means unthinkable.

This separation is correct. If there is no clear demarcation from external financial policy, then it is important to at least separate monetary policy and emergency aid internally.