The U.S. Federal Reserve has adopted a new inflation target objective. We expect a similar change from the European Central Bank (ECB) when it concludes its Strategic Review in mid-2021. But the ECB will need to do much more than revising its inflation target if it wants to ensure speedy recovery and growth.
The recovery fund agreed between EU leaders on 21 July is a big step forward for the European Union’s structure. Unfortunately, it is still an insufficient contribution to the post-pandemic European financial system and the path towards a low-carbon economy. More innovative monetary policies by the European Central Bank will still be needed to complement the EU’s recovery fund in the future.
This week the Dutch government blocked a proposal to activate a special credit line for countries who need financial support to fight the Covid19 crisis. But the logic behind the Dutch position is backward-looking and lacks diplomatic tact and political leadership.
Europe needs helicopter money to cope with the severe upcoming recession while avoiding a massive unsustainable debt burden. As soon as the economic recovery phase starts, the ECB should boost consumption in a fair way by sending money directly to all citizens.
EU Treaties are no obstacle for the Eurogroup to take decisive actions in favour of gender diversity in the European Central Bank.
More than 160 academics and civil society representatives signed an open letter urging the new president of the European Central Bank to take concrete action in the fight against climate change.