Facing a resurgence of tensions in the eurozone, the European Central Bank (ECB) is again under pressure to take action to support the economy, approaching its monthly monetary policy meeting on Thursday.

The political crisis in Italy and Cyprus bank “will weigh heavily on confidence in the euro area for a while,” said economist Berenberg bank, Christian Schulz. Monday holiday in most European countries, the euro fell as investors playing the caution after the Cypriot and Italian events. Around 7:00, the euro traded at 2 8 dollar against dollar on Friday to 22 hours. However, the room for maneuver of the ECB seem limited.


A drop of the main ECB policy rate, which parked since July to a record low of , is a priori excluded by analysts. According to them, this approach would not be effective in the current context. In the eyes of the Board of Governors of the monetary institution, “it is not the level of the interest rate the main problem, but the fact that lending rates in the periphery [troubled countries] do not reflect the policy low rates “practiced by the ECB said Michael Schubert, an economist at Commerzbank.

The problem of transmission of monetary policy, pointing to numerous occasions by the President of the ECB, the Italian Mario Draghi, is particularly evident in the weakness of credit in the monetary union. The figures released Thursday show that credit to the private sector in the euro zone have decreased again to in February as in January. These data reflect both the strict conditions imposed by banks to borrowers and anemic demand, particularly SMEs, raising fears for the expected recovery in the second half of the year.


However, the ECB is not willing to buy bonds issued by companies – a possibility suggested by some economists to assist in funding – said Michael Schubert. As for buying sovereign bonds in unlimited quantities via the OMT program (“Outright monetary transactions”), adopted in September, he would first have to countries that wish to benefit from seeking the assistance of the European Stability Mechanism and fold in strict reform programs.

A new injection of cash in the long term, like the two loans granted to three years in late 2011 and early 2012 the bank is not really considered, at the time these have started to repay their first loans.

“None of these measures does not seem convincing,” Judge Christian Schulz, that table instead of a soothing message from Mr. Draghi at the press conference following the rate decision. “But after threatening to pull the rug from under the feet of Cyprus, it could be difficult for the bank to convince markets that it is really ‘ready to whatever is necessary” to keep the eurozone in its current borders ” , say to them experts at Capital Economics, referring to the term used by Draghi last summer, when hovering threat of collapse of the monetary union.


The monetary institution Nicosia indeed threatened to cut the tap of liquidity to banks if a rescue plan was not adopted quickly, accompanied by a restructuring of the banking system. A plan was finally approved on time, avoiding bankruptcy in the island. Closed for twelve days in order to avoid possible “bank run”, banks reopened Thursday in quiet, thanks to strict but temporary capital controls.

If these events have worried investors, they have not resulted in panic – “a good sign,” according to Holger Schmieding, chief economist at Berenberg. The rating agency Standard & Poor’s also said Thursday that agreement on Cyprus should not have an immediate impact on the ratings of banks in the euro zone.

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