The credibility of the Euro’s integrity is a trap for the Eurozone. There are two reasons why the credibility of the European Central Bank’s bond-buying program (toxic) and that of the European Commission’s attempt to force down the Euro’s value (tense).
The credibility of the European Central Bank’s purchase of bonds has been called into question by the Eurogroup and the Commission due to the failure of the first round of purchases to save the euro from a disastrous collapse. The Eurozone cannot survive without the ESM. If the ESM were to disappear, the European Central Bank would be left with no choice but to print even more money in order to keep the euro alive.
The second point of criticism is the fact that the ESM was not included in the original bailout plan agreed to by the leaders of the Eurozone. The ESM was created in order to help bail out the banks and financial institutions that lent money to the governments that lent it the money in the first place and not as a way of keeping the Eurozone afloat.
The ESM is not a good thing, especially if the euro zone is going to have to start printing its own money in order to pay back all the debt that it has accumulated over the years. The credibility of the euro was lost when the European Commission brought in an extremely watered down version of the plan that was designed to allow the euro zone to save itself. When the Commission made it clear that it would not tolerate any of the changes to the original plan, the European Central Bank was forced to cancel the second round of purchases and pull back from its plans to use the ESM as a means of keeping the euro alive.
With the euro having already collapsed and a potential economic disaster on its hands, it is little wonder that Europe is desperate to prevent the euro from ever collapsing in the first place. It is in their best interest to keep it alive by continuing to buy up bonds from nations that can afford to keep paying them and to use the ESM to keep the euro as stable as possible. It is also in their best interest to continue to do whatever they can to keep the euro as strong as possible and avoid a large scale collapse in order to prevent the euro from losing all its worth and becoming almost worthless.
No matter what happens, Europe can make sure that the euro survives because the euro zone will not fall apart if the credibility of the Eurozone is maintained. The only way to have this happen is for the European Central Bank to continue its purchases and to work hard at keeping the euro together even as it does whatever it takes to keep the price of the euro high enough to make it a worthwhile investment.