President of the European Central Bank (ECB) Mario Draghi has been behind bailouts (photo:dpa)

Europe's stick and carrot economic policy fails to deliver

Policymakers in the eurozone seem to have had a change of heart. They have abandoned their stick and carrot approach to bailing out failing economies in Europe. But the new approach of a bail-in still gives confused messages and places short-term political goals ahead of sound, long-term growth policies which invest in healthy companies and those willing to be rewarded for their skill and business acumen.

EUROPE’S growth and public finance crisis has been characterised by two policy principles for several years - the stick or the carrot.

The stick meant that European Union member countries which failed to put their accounts in order would be penalise...

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Professor Enrico Colombatto
Under this new approach bad banks, and possibly bad governments, would be rescued by their stakeholders - shareholders, depositors, suppliers and bondholders - rather than by the ECB printing more money
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