ECB Preview & Euro Forecast: Will Lagarde Respond to COVID-19?

ECB Preview & Euro Forecast: Will Lagarde Respond to COVID-19?

With the latest ECB announcement, European leaders are signaling that ECB leaders will not be able to intervene to take over the sovereign debt of member states in a financial crisis. In fact, if there is not another financial crisis in the next 10 years, they will not have to intervene at all.

European Council President and team lead of the Draghi program, Mario Draghi, has said that he will resign at the end of this month. At that time, the man who has been serving as the de facto head of the European Central Bank (ECB) since January 2020, will have more than ten years left on his term. This is not what many people expected.

Now that the new leader of the ECB, Mario Draghi, will be stepping down, the role of a new leader will be more clear. Is that member of the European Union that is the United States of America the frontrunner for the post of the new head of the ECB?

One thing for sure, the position of the new European president will be filled very quickly. There are already many names in mind for the position, and most will come from outside the Euro zone.

Is the United States of America leading the charge for the presidency of the Euro zone? Most people believe so. If the U.S. backs down, then Europe is toast.

However, if the Euro zone begins to fall apart, then the U.S. will have an enormous stake in keeping it together. If the U.S. begins to pull out of the Euro zone, then the European debt crisis will become worse.

The last thing that the U.S. wants is a major European crisis that can send their economy into recession. Therefore, while it is still very possible that the Euro zone will fall apart, I do not think that it is likely that it will happen any time soon.

As it stands, the U.S. is a major supporter of the Euro zone. They are using all of their political and monetary power to keep it together. However, if the European economies were to collapse, then the U.S. would be liable for massive reparations from Germany.

The economic crisis that the European nations are experiencing could cause them to go through a significant economic decline. Therefore, if there is another financial crisis soon, then the United States will not be able to support the Euro zone economically.

Of course, if the Euro area falls apart, then there would be serious problems for all of the European nations. If the member nations begin to struggle, then the U.S. will be forced to cut off its support.

The United States has invested a lot of money and has put a lot of strategic interests into maintaining a strong relationship with Europe. Therefore, if the U.S. pulls out of the relationship, then it will be very damaging to our national security.

Therefore, if the Euro area falls apart, then the United States will likely find itself in a very difficult situation. However, if the Euro zone remains strong, then we should be in pretty good shape.