Free exchange

摘要

Anyone labouring under the illusion that the euro crisis could be solved by liquidity provision from the European Central Bank (ecb), however munificent, has been disabused. By encouraging banks to stock up on domestic government debt, the ecb's loans have reinforced the pernicious links between weak banks and weak governments. That connection is currently hurting Spain. Meanwhile, a German-inspired "fiscal compact" to insert public-debt brakes into national laws does nothing to help countries such as Italy climb out of the debt pit.