High debt-to-GDP ratios in France and Italy may increase political pressure on the ECB, risking its monetary policy autonomy, analysis shows.
The European Central Bank’s independence faces growing risks as rising debt levels in key Eurozone economies heighten political pressure, according to Commerzbank’s Central Bank Pressure Index. The analysis, based on AI-driven assessments of politicians’ statements, highlights past demands on the ECB during the sovereign debt crisis and warns of renewed politicization of monetary policy.
Debt-to-GDP ratios in countries like France and Italy remain elevated, with limited fiscal consolidation efforts exacerbating the strain. While the ECB’s Pandemic Emergency Purchase Program (PEPP) and the 750 billion euro Next Generation EU fund temporarily eased pressure, both are now winding down, leaving the central bank more exposed to political influence.
The analysis notes that rising yields have increased the interest burden on public budgets, further complicating the ECB’s ability to act independently. Unlike in the U.S., where pressure often stems from a single source, Eurozone demands have historically been broader and more systemic.