In 2010, the European Central Bank (ECB) purchased bonds issued by Greece and other euro zone economies with excessive government debt. This bailout raised a number of concerns, as discussed in the Economist. “Even as the bank’s dealers were pushing cash into the bond markets of selected euro-zone countries, its president was trying to reassure Germans that the ECB had not lost its independence.”
a. What risks would be created by a loss of ECB independence?
b. Does it matter what people think of ECB independence?