Central Banks: The Hidden Engine of European Rearmament

In 2015, during a joint NATO exercise, German soldiers were faced with such a severe weapon shortage that they had to replace unavailable machine guns… with broomsticks. Ironically, their leader at the time, Ursula von der Leyen, now President of the European Commission, is now trying to embody the continent’s “rearmament” ambitions.

Talking about money inevitably means talking about politics, especially in a European Union obsessed with strict control of deficits and quick to sanction nations that do not meet arbitrary and useless criteria. Yet, a simple, readily available, and technically easy-to-implement solution could immediately trigger the strengthening of European defense: seizing the 330 billion dollars of Russian central bank funds frozen in the European banking system. The confiscation of these funds would immediately reinforce Ukrainian defenses and finance the deployment of a European force capable of guaranteeing peace once an agreement is reached.

This war has been going on for more than three years, and almost nothing has been done in Europe to strengthen the armies, primarily due to financial reasons. This blockage — this European apathy — strangely reminds us of the disastrous management of the “sovereign debt crisis”, which revealed a catastrophic misunderstanding of money and the monetary system.

Let’s go back to the sources. On August 15, 1971, U.S. President Richard Nixon unilaterally decided to end the convertibility of the dollar into gold, allowing the currency to “float”. This historic break inaugurated a new paradigm that would propel the economic growth of the West. Certainly, the currency is no longer backed by gold, but it is now supported by something far more powerful: all of us. Since 1971, the money in circulation has been guaranteed by collective trust and the power of our nations.

Economic expansion, consumption, investment, and even public spending in certain cases, rely heavily on an actor as fundamental as it is misunderstood: the central bank. It is thanks to its generosity — by maintaining low interest rates and managing liquidity — that our economies have survived the crises and speculative bubbles of capitalism. The European Central Bank (ECB), in particular, holds the financial fate of 350 million citizens across 20 countries. Its decisions are crucial for the future of the continent. Central banks have become true political players, and with its monetary creation power, the ECB has demonstrated its ability to intervene effectively during times of crisis.

Today, in the face of the threats looming over Europe, it is more necessary than ever to step out of the shadows and take action. The ECB could play a crucial role in implementing a centralized and coherent financing strategy. Not only does it control Europe’s monetary levers, but it also has the resources necessary to help structure a quick and effective rearmament plan. Central banks have proven in the past their ability to generate sustainable solutions in the face of financial crises. They must now act to ensure Europe’s security and sovereignty.

The ECB has the necessary tools to create a virtuous circle in which monetary creation could be used to finance not only defense, but also the economic growth needed to support a strong and united Europe in the face of global challenges. In the face of threat, it must take its responsibility and act with the same determination as it did during past financial crises.