what policymakers are trying to do is come with enough force, such that
confidence can be restored overall in the economy by market participants.
In this particular case, what we see from history is this just wasn't enough.
And in fact, we see that directly in rates.
Spreads on Spanish and Italian sovereign debt, which up until this point
had be somewhat contained, increased dramatically in the summer of 2011.
Leading to a statement from the ECB on August 7th that it would buy bonds from
those countries, Italy and Spain, in order to maintain stability of their debt.
This was a very big move for the European Central Bank.
And it was the start of a series of
fairly significant moves that were unprecedented in its history.
The European Central Bank was set up with a single mandate.
And that single mandate was to keep inflation hold to a steady currency.
We don't wanna have a high inflation rate.
It was not asked, worry about stability.
It was not required in it's mandate to worry about unemployment.
The federal reserve on the other hand, in the United States has a dual mandate
to worry both about full employment and about inflation.
That provides a little more wiggle room in cases like this.
So the actions that are taken by the ECB here, hard to immediately
see how those actions are related to inflation keeping a stable currency.
And there would be court challenges that would take place over the subsequent
several years about whether the ECB was actually exceeding their mandate.
And this would be step one in that process.