The European Central Bank: From Problem to Solution

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The ECB has moved from part of the problem to part of the solution. At the beginning, it focused single-mindedly on headline inflation, neglected risks to financial stability, opposed debt restructuring and hesitated to embark on quantitative easing even when the spectre of deflation loomed. Now it acknowledges its lender and liquidity provider responsibilities, has shown itself capable of pursuing unconventional policies in unconventional circumstances, has softened its doctrinal opposition to debt restructuring and has assumed additional responsibilities for banking and financial supervision. This chapter traces the transformation.