Search

Begin New Search Topic European Central Bank

1. Central Banks Caught Between Market Liquidity and Fiscal Disciplining: A Money View Perspective on Collateral Policy

Author:
Jakob Vestergaard and Daniela Gabor
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Despite much attention to unconventional monetary policies after the financial crisis, the collateral policies of central banks are rarely discussed. And when they are, the haircuts applied to assets pledged to access central bank liquidity tend not to be analyzed. An exception to these trends is the recent work by Nyborg (2017), who argues that the collateral policies adopted by the European Central Bank (ECB) aggravated the sovereign debt crisis and put the survival of the euro at risk. Taking our point of departure in the money view literature (Mehrling 2011), we argue however that Nyborg’s critique of the ECB’s crisis response is misguided and that his proposal to deepen and reinforce the ECB’s role in the fiscal disciplining of member states would be procyclical and destabilizing. Through our analysis of Nyborg’s work and the ECBs crisis response, we identify core principles for countercyclical collateral policies suitable for market-based financial systems.
Topic:
International Political Economy, Global Markets, Central Bank, Macroeconomics, Money, Fiscal Policy, European Central Bank, and Banking
Political Geography:
Europe

2. Eurozone Reform: A Victim of Political Economy

Author:
Linda Zeilina
Publication Date:
11-2019
Content Type:
Special Report
Institution:
Europeum Institute for European Policy
Abstract:
With a new European Commission and a new head of the European Central Bank (ECB), the Eurozone is set to have new leadership and an opening for positive change. As Eurozone faces old and new challenges, it is in dire need of improved capability to tackle both legacy and new problems.
Topic:
Political Economy, Reform, European Union, and European Central Bank
Political Geography:
Europe

3. Interaction between monetary policy and bank regulation: lessons for the ECB

Author:
Marek Dabrowski
Publication Date:
02-2016
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The European Central Bank (ECB) recently became engaged in macro-prudential policies and the micro-prudential supervision of the largest Euro area banks. These new tasks should help complete financial integration, and make the Euro area more resilient to financial instability risks. However, the multiplicity of mandates and instruments involves a risk of their inconsistency which could compromise the ECB’s core price-stability mandate as well as its independence. The experience of central banks during the recent global financial crisis confirms that such risks are not purely hypothetical.
Topic:
Monetary Policy, Economic growth, Banks, Macroeconomics, Innovation, Trade, and European Central Bank
Political Geography:
Europe and European Union

4. Sovereign Bond Purchases and Risk-Sharing Arrangements – Implications for Monetary Policy

Author:
Monika Blaszkiewicz
Publication Date:
07-2015
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
The design of the euro area Quantitative Easing (QE) programme raises the question of whether insufficient liquidity in the bond markets will reduce the impact of the programme and lead to market volatility. While estimates suggests that scarcity of around €102 billion may arise over the life of the programme, to date the QE programme has met its monthly targets and bond market volatility has been managed. Questions also arise in respect of the fact that risk is not fully shared on up to €738.4 billion to be purchased over the life of the programme. Partial risk sharing raises the spectre of defaulting central banks exiting the euro system, and existing members being unwilling to bear associated costs, and thus the future of the euro area. However, estimations suggest that, at present, all national central banks should be able to bare losses stemming from sovereign debt purchases under the current round of QE. This report was prepared within a research project entitled Sovereign bond purchases and risk sharing arrangements: Implications for euro-area monetary policy, which received funding from the European Parliament.
Topic:
Finance, Economic growth, Banks, Trade, and European Central Bank
Political Geography:
Europe and European Union