In some euro area countries, unemployment rates are in the range of 20% to 25%. If that isn’t an incentive for taking countermeasures, what is? It, of course, makes life easier for governments if they can take on new debt at a lower interest rate. That is why we advocate a strict application of the Stability and Growth Pact.
Irrespective thereof, however, we must fulfil our mandate of keeping prices stable. Conversely then, how dependent is the ECB on the success of governments’ reforms? If no way is found to overcome unemployment and indebtedness, how will the ECB ever be able to return to a normal monetary policy?