The ECB and the cost of independence: uncovering a new ‘doom-loop’ in Europe’s Economic and Monetary Union

The European Central Bank has frequently used unconventional monetary policy approaches, such as large scale bond purchases, since the financial crisis. Armando Marozzi presents evidence of a new ‘doom-loop’ in Europe’s Economic and Monetary Union arising from these measures. He shows that once the ECB adopts unconventional monetary policy approaches, it tends to take stances that promote conservative fiscal policies among member states. This fiscal conservatism in turn produces lower GDP and inflation, increasing the need for further large scale bond purchases.