IN THE autumn of 2008, Alistair Darling, Britain's finance minister, was told that Royal Bank of Scotland was just two hours from folding, causing cashpoints to run out of money. The same fears motivated the massive rescue programme in America - the bank bailouts, fiscal stimulus and monetary easing by the Federal Reserve. But in Greece today, the banks are closed and the cashpoints are limited in how much they can dispense.
Today has seen another round of rumours and speculation. For the moment, we are heading for the promised referendum on Sunday, which the Greek government says is not about euro exit, although EU leaders say it is. To some, this is a complete failure of policy. Frances Coppola tweeted that
No currency-issuing national central bank would freeze the money supply in a depression. But that's what the ECB has done to Greece.
But this is the fundamental problem of the single currency. The ECB isn't a "national" central bank; it is an international one. When the Bank of England and the Federal Reserve stepped in during 2008,...Continue reading
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