In this edition of U-talk, Elodie from France asks: “Does the strong currency policy conducted by the European Central Bank harm EU countries which have a weak currency?”
Franco Bruni from Bocconi University in Milan responded:
“I do not think the ECB’s monetary policy is restrictive, or that the exchange rate of the euro is too strong. On the contrary its monetary policy is very expansionary.
“The interest rate has been quite low for some time and Europe is flooded with a lot of monetary liquidity.
“It is not a strong monetary policy at all. The real problem, I would say, is that the ECB has had some problems adapting its policy to meet every nation’s needs. We cannot have a single monetary policy until the markets are better integrated.
“We need uniform financial rules, as well as unified monetary, financial markets and payment systems. Only under those conditions can a single monetary policy work for everybody.
“Another problem we have right now is that the transmission of this policy from the centre to the periphery is happening at different speeds. This is a major difficulty.”
Thanks to the Instituto Superior de Economia e Gestão/Istituto per gli Studi di Politica Internazionale,
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