The idea of a central bank of Europe is to provide a managerial overview of the relationship between national central banks. This supervision provides stability for the banking system as a whole. But the European Central Bank has reduced itself to simply managing the money supply and has left the managerial function to the discretion of national banks. This lack of supervision included the neglect of non-performing bank loans by leaving them on the books. The European Central Bank failed miserably to perform its function as the bank of last resort. The result is the economic disasters of Greece and to a lesser extent, Spain and Italy.
By Jack Rasmus
Image by EJ Insight