This ever increasing problem of a ” no bail-out clause” in 1993 when the European Central Bank was created, will not allow for as many changes as Draghi requires!
Firstly as the ” lender of last resort ” and as the name implies it will only look to operate within the framework set down within its primary objective, that of price stability. Or to put it another way keep inflation down through out the Euro Zone,when countries overheat!
The sheer fact that its mandates prevent any change in this by virtue of its stringent rules,that all assets offered to the bank as collateral are at least in theory good and all equally free from the risk of inflation. This particular mandate relates to sovereign debt and its percentage of its ” gross domestic product” as a member state!
This particular clause with regard to ” sovereign debt and gross domestic product” calls into question the changes Draghi is looking to implement to save the Euro!
Firstly the countries in financial difficulty have toxic assets with little or no worth. So can only be purchased as junk and as countries in this situation already have junk status, his proposal to purchase various countries bonds would not keep inflation down but fuel overspending! The additional fact he is proposing letting the bank print more money in a last attempt to prevent this overheating will only prevent an even more catastrophic overspend by countries desperate to repay their debts.
Read the Article at HuffingtonPost