Banks are not lending to each other — and the ECB isn’t stepping in to solve the problem. This is a serious structural issue with the way that the European monetary system was constructed: the ECB is tasked only with guarding inflation, and not with ensuring the health of the banking system. Individual national central banks are meant to do that. But they can’t print money — only the ECB can. So when there’s a liquidity crisis, no one’s able to step in and solve it.
Wednesday, 16 November 2011
There's An Immediate Crisis Happening In Europe, And It's Not About Sovereign Debt
The heart of this ongoing problem, he says, is the failure of the European Central Bank to step in and take an active role:
What is true is that Europe is in the middle of a textbook liquidity crisis.
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