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I think it's because some of the member states are already heavily indebted with weak economies, like Greece and Italy. A recession caused by monetary tightenin
by cko 4y ago
I think it's because some of the member states are already heavily indebted with weak economies, like Greece and Italy. A recession caused by monetary tightening may be annoying for Germany or the Netherlands, but very bad for most of the southern European countries.
- FabHK 4y agoThis. Italy already pays 1.9 percentage points higher rates than Germany, and has 140% debt to GDP. If the ECB sharply raises rates, then Italy's debt might become unsustainable. The Economist notes: "The country probably cannot tolerate yields on its bonds much above 4%. Around that point, the goals [of the ECB] of price stability and defending indebted countries would become irreconcilable. Should interest rates surge, the euro area would look dangerously frail. " https://www.economist.com/leaders/2022/06/23/how-fighting-inflation-could-imperil-the-euro-zone https://www.economist.com/leaders/2022/06/23/how-fighting-in...