'It is against EU law for the central bank to finance governments .. as eurozone inflation has shot up to a record level of 8.6 per cent.''The head of Germany’s Bundesbank has warned it will be “virtually impossible” to decide if a divergence in borrowing costs between eurozone countries is justified, arguing it would be “fatal” for governments to rely on the European Central Bank’s support.
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It is against EU law for the central bank to finance governments .. Nagel cautioned against “using monetary policy instruments to limit risk premia, as it is virtually impossible to establish for sure whether or not a widened spread is fundamentally justified” .. Since Nagel took over at the Bundesbank at the start of the year, he has become increasingly concerned as eurozone inflation has shot up to a record level of 8.6 per cent. He said the ECB, where he is a member of the governing council, should “concentrate all of our efforts on combating this high level of inflation”.'
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Bundesbank boss warns against ‘fatal’ assumptions in ECB crisis tool, July 4, 2022
Context(Global Stagflation) - 'Inflation hits record 8.6% for 19 countries using the euro [surging past the 8.1% recorded in May]'(Banking Reform) - 'The nineties ushered in unfettered Credit in a scope never previously experienced.'