Basic solidarity in a currency area consists in the countries in good health having interest rates that are too low for their needs, which Germany rejects

The ruling of the German Federal Constitutional Court , which questions the role of the ECB in the monetary financing of fiscal deficits, reveals several components of Germany’s negative view of the ECB’s current behaviour: It gives rise to a moral hazard: as fiscal deficits are very easy to finance thanks to public debt monetisation, the euro-zone countries no longer have any incentive to improve their public finances or to lift their potential growth. This risk, it has to be admitted, does exist , and the monetisation of fiscal deficits should be limited to deficits that do not result from the absence of reform; It results in extremely low interest rates, which is negative for Germany, a creditor country with a high savings rate. This argument, in contrast, is not admissible: in a currency area, the countries in good health have to accept that area interest rates will be too low for their needs.