The European Central Bank’s unbending stance now threatens the survival of the euro and the broader integration of Europe itself, say European politicians and analysts. Forgetting for a minute whether the ECB has the will to intervene and print money like the U.S. Federal Reserve, the big question is whether it has the legal authority. According to its charter, the ECB’s role is to maintain price stability and maintain the euro’s value by preventing inflation. It is “specifically prohibited form financing the governments of euro area members,” says the New York Times. Still, because it can print money, its ability to buy the bonds of member nations is theoretically unlimited.
While becoming the lender of last resort would be against European law, many believe the ECB won’t let the euro collapse to defend that principle. Many European, and U.S., leaders says the ECB is the only institution that can prevent the collapse of the European economy and with it the common currency. But the Wall Street Journal says by transcending its mandate it would assume as new role as the most potent institution in Europe. The WSJ then gives a nice summary of how the ECB got into this predicatment.