International

The European Central Bank (ECB) is at last showing the courage to buy up EU member states’ bonds after years of having cold feet. SP Member of Parliament Arnold Merkies is positive about the ECB’s decision, but argues that the Bank must do all in its power to ensure that the money goes straight into the real economy and not into bubbles in the financial markets.

By pumping €1100 billion into the economy, the ECB is looking to tackle deflation. ‘It’s good that the ECB has overcome its initial timidity to grasp this unconventional method,’ says Merkies. ‘A few years ago, when the SP proposed just the same thing, many reacted to it as if the suggestion was outrageous. It shows also how desperate the situation is. If you really want to address inflation then it’s important that the money goes to the right place. You want also to avoid creating more financial bubbles. If it leads to a spending stimulus in the economy and goes directly to small and medium-sized businesses, then the operation will have been a success. If not, then the ECB’s mandate will have to be adjusted.'

Merkies wants in addition to see a fundamental debate about the monetary system. ‘With the euro the last vestige of influence that the people had over the creation of money has been definitively thrown away. The time is ripe for a debate on our monetary system, including what sort of mandate an institution like the ECB should have. In my view this mandate should be changed to give the ECB a duty to stimulate the economy and employment.’