Double up

The European Central Bank has just announced that it will almost double its 'subscribed capital' over the next three years, from €5.76 billion to €10.76 billion. 'Subscribed capital' is the amount that countries pay into the ECB when they become fully paid up members of the eurozone.

The real figure will actually be less than €10.76bn because countries like the UK, which aren't eurozone members, will not pay in their designated full amount unless they join. However, Germany for example, will have to contribute nearly €1bn more to the ECB over the next three years, bringing its total share to €2.04bn.

Although these amounts are relatively tiny compared to the figures banded around, running into the hundreds of billions, that may be needed to rescue the likes of Portugal and Spain, this is sill a significant move.

The "volatility" of credit risk is cited as one of the reasons for the first increase in the ECB's capital in its twelve year existence, and given the bank's exposure to various potential 'bad' loans this isn't surprising. The ECB's purchase of government bonds from struggling eurozone countries is running at €72bn, not to mention its funding for the eurozone's ailing banks in Spain, Portugal and Ireland, has left the eurozone's central bank increasingly vulnerable.

Today's news will certainly do little to reassure those German politicians and taxpayers who still believe in strict central bank independence.