Banking on the bankers

Central bankers and international financial institutions have been the core of the decision- and policy-making during the economic crisis which spread in 2008. The European mess has found in this institution a way out even if, at times, they contributed to aggravating various national crises (e.g. Greece). By taking control of the political economy in the eurozone, central bankers, especially the European Central Bank (ECB) president Mario Draghi and Germany’s Bundesbank president Jens Weidmann, favor a deep analysis of the causes of the speculative attacks and they have tried to pass through the storm by limiting damages. The clash between the two most influential monetary decision-makers in the eurozone – particularly the harshness of Weidmann – has had several negative effects on southern Europe. The spread between Italian and German treasury bonds had widened to 500 basis points in August 2011, which led to the substitution of Silvio Berlusconi, then Italy’s Prime Minister, with Mario Monti. The role of economic, monetary and financial institutions in tackling the crisis is huge and discretionary. In the United States, the Federal Reserve chairman Ben Bernanke seems to be the one who still believes in the power of quantitative easing. In fact, he is about to launch the third QE of his mandate. Many economists don’t agree with him and his policies but he doesn’t seem to mind. On the contrary, the hot water in which Europe is swimming could be solved with an increased role of the International Monetary Fund as mediator among European nations. The path to walk remains long and full of pitfalls, and only with new tools (issuing eurobonds might be one) can the Europe turn a corner on its most recent history.