If France is to avoid default, the European Central Bank will need to buy large amounts of its government’s bonds through the Transmission Protection Instrument. But meeting this need—and preventing a potentially disastrous eurozone sovereign-debt-crisis—will require the ECB to waive its own rules.
WASHINGTON, DC—The grandiose claim that “Britannia rules the waves” inspired the wry quip that, in fact, Britannia waives the rules. While the pun was meant as a putdown, waiving rules can be a prudent decision. That is certainly the case for the European Central Bank today, as it weighs its options for helping France, Europe’s second-largest economy, cope with its $4 trillion debt.
