The Real Crisis Risk at the ECB
The central bank has plenty of tools left to tackle a European slump, but will Mario Draghi’s replacement be as willing to wield them?
Will the ECB have the desire to fight another slump?
Photographer: Martin Leissl/BloombergThe euro zone has only recently recovered from a double-dip recession, but there are already questions about how prepared it would be for a new crisis.
All eyes are on the European Central Bank, which has been the strongest line of defense against an economic slowdown. While pessimists worry that the ECB has few tools left if it needs to revive growth — given the region’s already rock-bottom interest rates — such concerns are overdone. A far bigger risk is the replacement of Mario Draghi as the central bank’s president this year. Will the new chief be willing to use all of the instruments available to take the monetary union out of any crisis? It’s far from certain.