Eurozone crisis: Who wants what

3. What does the European Central Bank do?

Geert Vanden Wijngaert/AP
European Central Bank President Mario Draghi arrives for an EU summit in Brussels on Thursday.

The European Central Bank (ECB) isn't quite what it sounds like. Though it does issue the euro currency, it is unlike national central banks in that its sole political responsibility is maintaining price stability by avoiding deflation and keeping inflation to a minimum.

While other central banks act as a lender of last resort – something many critics want to see the ECB do – and assume responsibility for encouraging economic growth, the ECB has a much more limited arsenal of powers. So far, Germany has resisted issuing pan-eurozone eurobonds via the ECB, fearing it will result in an environment in which people invest without fear of negative consequences, something known as a moral hazard. Given the constraints on what it can do, ECB chief Mario Draghi's announcement Thursday that interest rates were to be cut from 1.25 percent to record low of 1 percent is in line with continuing policy. 

3 of 4
You've read 3 of 3 free articles. Subscribe to continue.
CSM logo

Why is Christian Science in our name?

Our name is about honesty. The Monitor is owned by The Christian Science Church, and we’ve always been transparent about that.

The Church publishes the Monitor because it sees good journalism as vital to progress in the world. Since 1908, we’ve aimed “to injure no man, but to bless all mankind,” as our founder, Mary Baker Eddy, put it.

Here, you’ll find award-winning journalism not driven by commercial influences – a news organization that takes seriously its mission to uplift the world by seeking solutions and finding reasons for credible hope.

Explore values journalism About us