By James Saft
(Reuters) – If there is anything more sobering for a central banker than failing to meet the bank’s mandates, as the European Central Bank arguably has, it is having one’s very legitimacy challenged.
The recent round of European Parliament elections were, if not a disaster for supporters of the euro project, resounding notice that many voters are deeply unhappy and suffering economically, with eurosceptic parties more than doubling their seats.
And given that an ECB-engineered weaker euro would help to shelter hard-hit euro zone workers and bring inflation closer to the bank’s 2 percent target, that is exactly what we should expect.
How to interpret the vote? At the very least a substantial minority of EU voters are dubious of the sort of closer integration which is needed to prevent another crisis. And at the margin there is a small, but growing, rump of voters who seem to have had enough of the project entirely. In short, the ECB’s constituency includes many who feel they’d be better off with a different euro, a different currency altogether, or a differently constituted central bank.
To be sure, mainstream pro-European parties will still hold nearly 70 percent of parliament seats, and the results in Italy, where Prime Minister Matteo Renzi’s centre-left Democratic Party scored a strong win, are somewhat reassuring.