The actions of the European Central Bank will determine outcomes

The argument

In 2008, the world faced a devastating financial crisis. Economies all over the world felt the impact and suffered from it. In response, the European Central Bank stepped in to intervene, and the actions it took helped to mitigate the damage to many countries' economies. That episode is the evidence this argument rests on: it is the clearest available demonstration of how much difference the ECB's choices make to outcomes across the bloc. Those actions came in two forms. In response to the crisis, the ECB adjusted interest rates, reducing them by 325 basis points, which helped decrease risk and aided price stability. They also took several "non-standard" measures, unusual policies that mitigated the damage done. Among other things, the ECB extended collateral, improved refinancing operations, and purchased covered bonds. What these measures have in common is that they addressed the plumbing of the financial system rather than the price of money alone, supplementing the needs of the European economy at points ordinary rate policy could not reach. The breadth of that toolkit is itself part of the argument: an institution with that range of instruments is not a marginal actor in a downturn. The coronavirus pandemic has imposed many financial hardships on the world. As the world reopens, nations will have to reckon with these hardships and nurse their economies back to health. The ECB has stepped in to help before, and it will likely do so again, perhaps with similar methods. That is why proponents treat the bank's conduct as decisive rather than merely relevant: it is the actor whose interventions reach the whole of the European economy at once. On this argument the shape of the recovery will be set less by any single national response than by what the ECB chooses to do.

Premises

Counter-arguments

The ECB's response to the 2008 crisis was flawed, to say the least - especially compared to, say, the US Federal Reserve. The ECB's measures were slow, indecisive, and limited in efficacy. As a result, they didn't help European economies as much as they could have. It would be unwise to put too much stock in their measures. In addition, the conditions of today's world and today's economies are very different from those of 2008. This is especially the case in the wake of an unprecedented global pandemic. The worst thing for the ECB to do would be to recycle the same flawed measures they took more than a decade ago, and apply them to today's world. At best, it would take them a long while just to come up with a new strategy - and even then, the effectiveness of that strategy isn't guaranteed.

Rejecting the premises

[Rejecting P1] The premise credits the 2008 measures with mitigating the damage while offering no comparison by which to judge them; the counter's view that the response was slow and less effective than the Federal Reserve's fits the same record. [Rejecting P2] Predicting that the bank will act again does not establish that its actions will determine outcomes — fiscal policy, national support schemes and the course of the pandemic itself are all in play, and monetary policy starting from rates already near zero has far less room than in 2008.