Although the UK is not in the euro, what the Governor of the Bank of England has to say about the eurozone's crisis will resonate, simply because he is one of the big global figures in central banking.
So it matters that he has given unambiguous support for the European Central Bank's reluctance to bail out "deficit" countries, such as Italy and Spain, which are having growing difficulties borrowing from the private sector.
He says that it is for the stronger eurozone governments to lend in an explicit and visible way to the likes of Italy and Spain, and not to try to hide from their electorates what they are doing by putting pressure on the central bank to provide the necessary finance.
Or to put it another way (which he didn't, but I am), it is largely down to Germany - the biggest and strongest economy in the eurozone - to provide a backstop of emergency financial support for the deficit countries, during the several years that it will take for Italy, Spain, Portugal and so on to rebuild the competitiveness of their respective private sectors, so that they'll be able to pay their way in the world.
With every German central banker saying more-or-less the same, this is probably the final nail in the coffin of the notion that the European Central Bank could use its own resources to become the so-called lender of last resort to governments experiencing serious funding challenges.
bbc.co.uk  |
