ECB adopts unclear strategy

Mario Draghi, President of the European Central Bank (ECB), announced on Thursday the second lowering of the interest rate in four weeks, this time by 0.25 percent to a record low of 1 percent. It remains unclear what he hoped to achieve with the move, the liberal-conservative daily Neue Zürcher Zeitung: "By relaxing its financial policy just ahead of the crucial EU rescue summit, is the ECB trying to show that it can do its bit with its usual instruments and that it therefore intends to fend off the widespread demands to turn it into a 'money canon'? Or is the ECB now trying to pave the way for unconventional financial policy measures, so that any future inclusion of the central bank in the rescue of states and banks is no longer such a major step? It could well be that this is the intention. After all, making long-term central bank loans available to banks will mean that the ECB can not only prop up institutions in need of greater liquidity, but also play a role in sorting out solvency problems."

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