The Roots of the Euro Crisis Lie at the Doorsteps of the ECB

I have written a column,  published in EconoMonitor, which argues that deficiencies in the Eurosystem monetary policy contributed to the “euro crisis”, which is, in reality, an intra-Eurozone balance of payments and external debt crisis.  It claims that the Eurosystem’s monetary policy instruments and procedures allowed intra-Eurozone external imbalances to accumulate since the start of the third phase of the EMU in January 1, 1999. As a result, though the Eurozone has low levels of net external debt relative to its GDP, it presently confronts, in its midst, what is likely the largest peacetime external debt crisis the World has ever seen.  Moreover, it points out that the Eurosystem’s monetary policy has always had large fiscal effects and currently results in financial transfers from Eurozone creditor countries (the GNLF) to Eurozone debtor countries (the GIIPS) that may amount to 1.3% of the GIIPS’ combined GDP per year.

Please see full post here.

On the subject of how the ECB has recently (ab)used its vast (unlimited?) powers I recommend the reading of the following column by Karl Whelan.