Why does everybody criticise the European Central Bank?
It’s a question of market confidence. Currency traders are still unhappy with how the ECB conducts its monetary policy. The ECB is controlled by a board made up of all 11 central bank governors, who still may represent the interests of their countries rather than of the eurozone as a whole. There is a feeling that a sense of direction is lacking, and that not only EU politicians but even central bank officials are not always singing from the same hymn sheet. Unlike the US Federal Reserve, the ECB has not yet mastered the fine art of keeping the markets guessing about what it is up to, while providing some clarity about the direction of monetary policy at the same time. As a new currency, the euro must prove itself attractive to international investors. The uncertainty means that many investors prefer to buy dollars rather than euros in a time of crisis. A fine example was the run-up to the ECB’s decision in May to cut interest rates. Until a day before the rate cut, ECB officials had w
