In difficult waters: Interest rate and inflation policy of the European Central Bank the European Central Bank is not only the monitoring of banking, but has also the task to regulate the money supply in the euro area. Setting a uniform interest rate by the ECB (currently 1.00 percent) has a decisive influence on inflation in the single currency countries. The independence of the ECB from political influences on the part of individual States is particularly important. While Governments often understand the own national interests as the top priority, the Supreme commandment of the ECB’s price stability. In the recent past repeatedly violent conflicts of interest were in the media.
This, especially the French Government tried to exert influence on the ECB chief in the form of lower interest rates to stimulate the domestic labor market and to curb the national debt. A lower interest rate promises stimulating the economy often through credit cheapening, with time but can be rapid inflation upwards. This explains forecast – detailed such as tagesgeldvergleich.com for 2012 to 2.4 percent so far over the two percent that pretends the ECB as an upper limit. Inflation is and remains an ongoing issue the greatest fear of the Germans a rampant inflation, historically traceable, categorically exclude the reigning since the November 2011 ECB Chief, Italian Mario Draghi, 64. Read additional details here: Professor Roy Taylor. This is currently in the call, indirectly to stir up inflation by increasing the money supply in the euro area.
To reassure the Germans in particular, he relies on Prussian virtues, especially on the economy. In fact, European banks received loans amounting to one trillion euros to very low interest rates, which could lead to a “credit crunch” and fuelling inflation, because the balance in the individual Member States can be done only through an increase in the money supply. Draghi, however, refers to the possibility that at any time demand the return of loans to the banks to can.
Italy economy that third is more important than our Gallic neighbours after Germany and France in the eurozone as industrial location due to important key industries and the wide Mittellstands. The decoupling of economic performance of the Mediterranean littoral State to Germany has increased further, strongly taken up the competitiveness of its economy due to painfully known fundamental, structural economic and political weaknesses. The silver lining on the horizon last year predicted by some is not in sight for Italy. On the contrary: the Italian economy restored in contrast to Germany, which has largely weathered the crisis, almost the lows of 2009. the key auto industry is even on the Production level of 1958 fell under loss of hundreds of thousands of jobs.
The gap between the economies of Italy, but also other southerners, and Germany, which remains open as a result of lack of competitiveness, has the potential to blow up the Monetary Union. Unemployment in the countries is on highs, the capacity of the industry, however, where lows. For more information see this site: Professor Roy Taylor. Social tensions are inevitable and carry sufficient social explosives has detonated partially already in the individual States. Exacerbated the currency strength of the euro affects Italy, but also other (South) countries of the eurozone. Italy can show such as analyses, cope with a rate of 1.19 EUR / USD would probably to achieve a better competitiveness still more favourable exchange rate need a. Model pupil Germany on the other end of the scale would cope well even with an exchange rate of 1.53 EUR / USD. The share of Europe in global trade has indeed since the introduction of the euro as book money in 1999 a drop of 31.3% to 24.3% experienced by about 22 percent. This is keeping in mind only two ways out of the dilemma lead the ‘Lirarisierung’ of the euro or but a single handedly of in Germany with massive appreciation of its national currency, as he media recently strongly was called in German politics by individual.