What exactly is the balance of supranational versus national monetary policy in the Eurozone?
It's an excellent question: And, if the ongoing policy parsing over Ireland is any indications, it's an issue that's far from closed.
Read at one level, Izabella Kaminska piece in the Financial Times blog Alphaville is complex analysis of monetary easing, economic fine tuning, and sterilization—to say nothing of the politico-legal issues of international sovereignty.
For example skim—don't read—this excerpt, cited from the ECB's 'opinion on the emergency stabilisation of credit institutions':
" The monetary financing prohibition in Article 123 of the Treaty is further clarified in Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of prohibitions in Article 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1) according to which overdraft facilities or any other type of credit facility with the ECB or the national central banks (NCBs) of Member States in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States are prohibited, as is any purchase directly from these public sector entities by the ECB or NCBs of debt instruments."
Even if the finer points of Kaminska's argument are bracketed out the larger point remains: The Eurozone is still very much an economic experiment in progress. And, as the largest consolidated economy in the world, it is an experiment with enormously high stakes.
It seems that some monetary policy actions still come as a surprise to those who follow the issue most closely.
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