climate policy

The ECB drifts from its core mission, embracing politics over monetary policy—what does this mean for Europe’s future? Edin Mujagić breaks it down.

Forget about all those bars of gold that are heavily guarded because they are incredibly valuable. Credibility is the most valuable asset for a central bank. It is the monetary version of what goodwill is to a company. In this respect, the ECB could learn a lot from the Fed. An analysis.

The more credible a central bank is, the more effective its policy is. With high credibility, a central bank needs to do less actual work to achieve the desired result: bludgeoning inflation. More words, and less action, so to say.