What is the ECB prohibited from doing in the Eurozone?

Question

Quizplus · Accepted Answer

The ECB is prohibited from directly financing member countries' fiscal deficits. This is to prevent the ECB from using its monetary policy tools to directly fund government spending, which could lead to inflation and undermine the independence of the central bank.

Answer: A, C, D are incorrect
 The ECB has the authority to set interest rates and has used this tool to influence economic growth and stability in the Eurozone. However, it is not prohibited from increasing or decreasing interest rates. The ECB also does not have the authority to set tariffs on goods from nonmember countries, as this is a responsibility of the individual member countries within the EU.

What Is the ECB Prohibited from Doing in the Eurozone