Eurozone crisis: ECB rating the raters

The leadership of the European Central Bank has presented views on a number of aspects of the eurozone crisis in public.



ECB executive board member Lorenzo Bini Smaghi reflected on the third phase of the eurozone crisis in a speech called Lessons of the crisis: Ethics, Markets, Democracy (13 May 2010).

Bini Smaghi discussed the feelings of taxpayers versus the consequences of non-intervention with regard to US examples and the case of Greece.

Quick response mechanisms are needed to fend off speculative attacks undermining the solidity of states, but the speaker admitted that it is hard to see how they can be made compatible with parliamentary scrutiny of the use of taxpayers’ money.

Bini Smaghi made a number of observations about market participants and herd behaviour, as well as the role of market information. He discussed the decision by the ECB to disregard the rating agencies in the case of Greek sovereign debt, the role of expert commentators with conflicts of interest and the influence of lobbyists on regulation and opinion making.


The issues are hardly surprising, but serve as a reminder when you listen to the next cocksure commentator and especially before you invest your money (or someone else’s).




Ralf Grahn