So the ECB and the Bundesbank don’t want to bail-out Italy via the IMF. But could national eurozone central banks do it? They already lend to their own commercial banks through the Emergency Liquidity Assistance programmes and there is nothing to stop the IMF accepting loans from any central bank. Could this be behind Jean-Claude Juncker and Olli Rehn’s cryptic comments on Tuesday night?
Obvious huge snag: such lending would have to be OK’d by the ECB, since it ultimately stands behind all the national central banks. But if the ECB (and the Bundesbank) want to give way on their “No pasaran!” on lending to the IMF, letting the eurozone national central banks do it might be a convenient way of retreating with a shred or two of dignity intact.
(Hat tip for this idea for the redoubtable Lorcan Roche Kelly of Trend Macrolytics, who knows more about the ELA and central bank financing than anyone alive).
For views and opinions on the European Union from Peter Spiegel, Joshua Chaffin, Alex Barker and Stanley Pignal, follow the 