European Central Bank: Independence risks rise with debt – Commerzbank

Commerzbank's Dr. Marco Wagner has examined how political pressure could compromise the European Central Bank's (ECB) independence, utilizing an AI-driven Central Bank Pressure Index (CBPI). The index identifies past instances of politicians pressuring the ECB during the sovereign debt crisis and warns that rising debt-to-GDP ratios in nations like France and Italy may re-introduce political influence over monetary policy.

Unlike the United States, where criticism of the ECB was typically singular, during the financial crisis, multiple politicians in Europe directly challenged the bank. Although this pressure eased during the COVID-19 pandemic and the energy crisis due to the ECB's rapid implementation of the PEPP and the large-scale NGEU funding, debt-to-GDP ratios in countries like France and Italy are projected to continue increasing.

Consequently, the CBPI suggests that the ECB faces growing risks of political interference, particularly as individual countries struggle to reduce their deficits.