This piece was written on the 14th of September and appeared as an Op-Ed in the Wall Street Journal on the 20th of September
Markets have been euphoric about the recent good news in the euro zone: the European Central Bank’s promise of potentially unlimited bond purchases, the announcement of a banking union, Germany’s green light for the European Stability Mechanism (ESM), a pro-European result in the Dutch election, and a softer EU stance on Greece.
All of this is in marked contrast to the fears of a summer meltdown that never quite happened. Could this be the beginning of the end of the euro zone’s crisis?
This piece was first written and circulated on the 2nd of September and appeared as a comment piece in Le Monde on the 10th of September
The Eurocrisis is on a pause as markets and EU leaders alike wait with bated breath for ECB. President Draghi, who has promised the European Central Bank will not let the Euro fail, to reveal his hand. They are right to think what the ECB will say or do is very important, but it is hard not to feel that too much is being expected of the ECB.
Between the things the ECB cannot do and the things it will not do, its ability to deliver a sustainable ‘big bang’ has been severely curtailed. There are three main reasons to suspect that no matter what the ECB does this week or the next it will not be sufficient to stem the Eurocrisis. Those who have their hopes riding on the ECB are best advised to recognize that while larger scale ECB interventions are necessary, they are simply not sufficient to bring the Eurocrisis under control.