The ECB has to be able to act, like the Fed, in favor of financial stability

The European Central Bank has to be able to intervene on markets like other central banks, with the same speed and the same instruments. To extend the mandate of the European central bank, today headed by Mario Draghi, a reform of the Treaties (in particular article 105 of the Treaty that constitutes the European Community) is needed.
We have to establish that the main objective of the ECB is no longer just price stability but also the stability of the economic and financial system and to support growth. This way, with strengthened powers, the ECB will be able to intervene on markets in a clearer judiciary framework and with more tools, also after the entry into force of the strengthened bailout fund (EFSF and then the ESM). There is strong opposition on this point from Germany for the position taken by the Bundestag and in part confirmed by the German constitutional court. Jean-Claude Trichet has so far defended the ECB's interventionist stance on fixed income markets and also Draghi has let it be understood that he wants to continue along this path.
Putting a brake on inflation and intervening to stabilize markets are two duties that along with others of a more regulatory and supervisory nature are part of the bylaws of the Federal Reserve and many other central banks. The fact that just the ECB does not have its powers to intervene on the markets made clear in the Treaties is an anomaly that has to be corrected, especially in a period of volatility of stock markets and of economic weakness. Martin Wolf, Paul Krugman and Guido Tabellini, just to name a few, gave indications in this sense on il Sole 24 Ore.
Financial stability has to be included among the priority objectives of the European Central Bank.

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