The continuing evolution of the ECB

In our article last week we noted that the European Central Bank (ECB) appears to be undergoing a process of transition, and evolving into a rather different organisation from the ECB of 1999, the start of the single currency. We continue this analysis, concluding that having started life as a Bundesbank clone providing very Germanic central banking, the ECB is becoming more truly pan-European, and a central bank for the whole Euro Area.

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The Unhappy ECB

Most central banks are finally beginning to tighten monetary policy. The European Central Bank stands out in not doing so, and not even making many preparations to do so. This is certainly not because there is no inflation in the Euro Area; on the contrary, it is higher than at any time since the introduction of the euro 23 years ago, and in Germany it is at its highest for nearly 40 years. What is going on, why is the ECB so reluctant?

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