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[交流] Europe’s Central Bank at Sea

Central bank purists are confused. How can the European Central Bank, a Germanic institution, now be in the business of buying government bonds issued by five of its 17 members? Why is this monetary authority acting like a fiscal agency? Isn’t the ECB supposed to be a politically independent and operationally autonomous institution committed to fighting inflation and safeguarding the currency?

Well, yes and no. And that answer speaks to the disturbing realities of modern-day central banking (or, to be more exact, central banking in the post-bubble world of debt overhangs and sovereign-debt concerns). It also sheds light on the endgame now taking shape in a confused and unsettled eurozone.

A sea-faring analogy simplifies some of the complexity. Imagine that a highly agile coast-guard vessel is called out to rescue a floundering boat. As the rescue is taking place, the vessel finds that it must also rescue two other, larger boats. It does so, but not before the captain receives assurances that a larger ship is coming to assist.

As the crew of the now-burdened rescue vessel waits for relief, they are forced to deal with restless passengers. With the ocean getting rougher, the once-agile rescue vessel is now so overburdened that some officers are second-guessing the captain, who again calls for the larger ship to help. Unfortunately, this ship seems hostage to a confused sense of mission and a distinct lack of urgency.

The overwhelming hope is that the larger ship will come and save the day. The fear is that it may not. And the question then becomes whether the crew of the struggling rescue vessel will decide that they can stabilize the situation only through a once-unthinkable action – throwing someone overboard to lighten the vessel and save the rest.

In a nutshell, this is the ECB’s situation today. The outcome is both uncertain and highly consequential – for Europe, of course, but also for a global economy that is in the midst of a synchronized slowdown and operating with a weakened anchor, owing to America’s recent debt-ceiling debacle and the humiliating loss of its AAA sovereign credit rating.

The ECB has already purchased almost a

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