As a result, analysis by the ECB finds that a common shock is amplified by about 30% – meaning all countries have to act together to mitigate large crises effectively.
As a result, given its primary objective of price stability, the ECB will be obliged to offset this expansion by implementing a restrictive monetary policy. In the end, the European economy will be confronted with higher fiscal deficits and higher interest rates, similar to the bad experiences of the seventies and early eighties.