“In their attempt to respect their duties, the ECB’s policymakers have made themselves political,” Greece’s finance minister Yanis Varoufakis told an audience of academics and economists in Paris last month. The refrain strikes at the heart of his government’s complaints against the notionally independent ECB. As one of Greece’s three main creditors - alongside the International Monetary Fund and the European Commission - the central bank is unique in wielding the power that can ultimately force the country out of the single currency. Despite not officially being party to the political negotiations over extending Greece’s bail-out, the ECB has made a number of discretionary moves since the Syriza government was elected just over 100 days ago. When he first swept into power, Prime Minister Alexis Tsipras appealed to Mr Draghi to provide some form of bridging finance to keep the country afloat as he sought to re-write the terms of Greece’s rescue programme.
It soon became clear the Italian would not be playing ball. Not only has the ECB rebuffed requests for temporary financial relief, but its disciplinarian stance has led to accusations that it is acting ‘ultra vires’ - taking politically motivated action outside of its legal remit to ensure financial stability in the eurozone. The ECB had no choice but to stop allowing Greece’s banks to post government debt as collateral for cheap cash. How could it do anything else? Otherwise, it was a blank cheque to Greece. That said, there must be some justification complaining of ECB using its role in a political way - it's not many years ago that it was accused of deliberately bringing down the then Italian PM by refusing any further lending / financing. The bottom line is that sovereign nationhood and one currency / central bank is a totally impossible combination. Either all the member nations of the Eurozone have to submit to one European government and have their countries treated as 'regions' controlled by Brussels, or they must return to independent currencies... Maybe one day we will wake up to the good news that the Greeks had defaulted to the IMF and as a consequence were kicked out of the Eurozone, since defaulting to the ECB won't do the trick with Germany too deeply involved with the ECB. Will we be so lucky? Methinks not. This Greek farce will go on and on until the last reader of the DT will lose interest and resort to playing chess online, as I shall do right now. I am only here for the beer (i.e. AEP) but the beer is no longer on offer.
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