A NEW ERA FOR MONETARY POLICY: CHALLENGES FOR THE EUROPEAN CENTRAL BANK

2017 ◽  
Vol 62 (01) ◽  
pp. 57-86 ◽  
Author(s):  
AD VAN RIET
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Global Financial Crisis ◽  
Balance Sheet ◽  
Price Stability ◽  
Lender Of Last Resort ◽  
New Era ◽  
European Central

Since the start of the global financial crisis, the European Central Bank (ECB) has faced exceptional challenges in fulfilling its price stability mandate, marking the start of a new era of monetary policy-making for the eurozone. This paper reviews the ECB’s evolving response from mid-2007 to early-2015, showing how it combined the standard tool of adjusting its policy interest rates with non-standard passive and active balance-sheet measures, accompanied by a forward guidance of its intended monetary stance. Altogether, the ECB stayed focused on price stability while fulfilling the two classical roles of lender of last resort to resolve money market tensions and market maker of last resort to repair monetary transmission. Addressing the many challenges was complicated by the nexus between fragile banks and vulnerable governments, the ensuing financial fragmentation and the complex institutional and political structure of the eurozone. Looking ahead, the new reinforced European financial architecture could make the ECB’s monetary policy task of maintaining price stability for the eurozone easier to accomplish.

scholarly journals Causes of The Outbreak of the Eurozone Crises: The Role of the Usa and the European Central Bank Monetary Policy

e-Finanse ◽  
2015 ◽  
Vol 11 (2) ◽  
pp. 47-63
Author(s):  
Natalia Białek
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Institutional Design ◽  
Global Financial Crisis ◽  
European Central ◽  
Low Interest Rates ◽  
The Usa ◽  
The U.S

Abstract This paper argues that the loose monetary policy of two of the world’s most important financial institutions-the U.S. Federal Reserve Board and the European Central Bank-were ultimately responsible for the outburst of global financial crisis of 2008-09. Unusually low interest rates in 2001- 05 compelled investors to engage in high risk endeavors. It also encouraged some governments to finance excessive domestic consumption with foreign loans. Emerging financial bubbles burst first in mortgage markets in the U.S. and subsequently spread to other countries. The paper also reviews other causes of the crisis as discussed in literature. Some of them relate directly to weaknesses inherent in the institutional design of the European Monetary Union (EMU) while others are unique to members of the EMU. It is rather striking that recommended remedies tend not to take into account the policies of the European Central Bank.

scholarly journals The Federal Reserve’s Dollar Swap Lines and the European Central Bank during the global financial crisis of 2007–09

2020 ◽  
Vol 44 (4) ◽  
pp. 723-747 ◽  
Author(s):  
Emmanuel Carré ◽  
Laurent Le Maux
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Federal Reserve ◽  
European Central Bank ◽  
Global Financial Crisis ◽  
Lender Of Last Resort ◽  
European Central ◽  
The Interest Rate ◽  
The Global Financial Crisis

Abstract Although the literature has studied the role of the Federal Reserve as the global lender of last resort in 2007–09, many aspects of the Dollar Swap Lines to the European Central Bank need further exploration. Accordingly, we provide original evidence about the auction operations, allotted amounts and interest rates with regard to the Federal Reserve’s dollar swaps and the European Central Bank’s dollar provision. More specifically, we examine the demand side of the Dollar Swap Lines (whereas the existing literature mentions the supply side only) and we scrutinise the interest rate (whereas the literature concentrates on volumes) set by the Federal Reserve, and also the rate set by the European Central Bank. Our findings cast light on the nature of the relationship between the Federal Reserve and the European Central Bank. Finally, we contribute to the literature on the global lender of last resort by coining the notion of the financial dilemma, under the dollar system within a framework of globalised financial markets.

scholarly journals Az Európai Központi Bank szerepének átalakulása az európai válságkezelés során = The Changing Role of the European Central Bank during the European Crisis in 2008

2021 ◽  
Vol 16 (1) ◽  
pp. 69-86
Author(s):  
Marcell Zoltán Végh ◽  
Anita Pelle
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Balance Sheet ◽  
Banking Union ◽  
New Era ◽  
European Central ◽  
European Crisis ◽  
Changing Role

Az elhúzódó európai válság során az Európai Központi Bank (EKB) szerepe is átalakult. Egyrészt válság idején, inflációs nyomás helyett deflációs veszéllyel szembesülve, a stabilitás biztosítása mást implikál, mint szokványos időkben. Másrészt tartósan nulla százalék körüli kamat mellett az eszköztárnak kevésbé bevált további elemeit kell bevetni. Az EKB esetében 2010. májusban indult új korszak az első eszközvásárlási programmal, amelyet több hasonló követett. A jegybank mérlege néhány év alatt több mint kétszeresére duzzadt, a legdinamikusabban bővülő tétel eszközoldalon az euróövezetbeli értékpapírok kategóriája lett. Mindeközben az EKB-nak a kiépülő bankunióban is központi szerep jutott. A bankfelügyelet élesítésére 2017 nyarán került sor, az eszközvásárlási programot pedig 2018 végéig vezették ki. Az EKB tehát új és jelentős feladatokat vállalt az európai válságkezelésben, alapvetően sikerrel. In the course of the prolonged European crisis, the role of the European Central Bank (ECB) has also changed. Firstly, in times of crisis, facing risks of deflation instead of inflationary pressure, ensuring stability implies other methods than in usual times. Secondly, with long-lastingly around-zero per cent interest rates, further, less used monetary policy tools are needed. In case of the ECB a new era started in May 2010, with the first asset purchase programme, which was then followed by several similar ones. The central bank’s balance sheet more than doubled in a few years’ time; the most dynamically growing item on the asset side was the category of Eurozone securities. In the meanwhile the ECB was assigned a central role in the newly developed banking union as well. Supervision was put in place in summer 2017 and the asset purchase programme was phased out by the end of 2018. Overall, the ECB undertook new and significant roles in European crisis management – fundamentally with success.

scholarly journals Determinanty normalizacji polityki monetarnej Europejskiego Banku Centralnego

2017 ◽  
pp. 175-188
Author(s):  
Irena Pyka ◽  
Aleksandra Nocoń
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Euro Area ◽  
European Central Bank ◽  
Balance Sheet ◽  
Open Market ◽  
Effect Analysis ◽  
European Central ◽  
Exit Strategies

Due to the implementation of non-standard monetary policy by the European Central Bank, concentrated in the first part of the financial crisis mainly on the unconventional open market operations, and in the second on the Quantitative Easing policy, the exit strategies and monetary policy normalization have become the subject of intensified discussion. The concept of a return to "normal" monetary policy of the ECB will require the implementation of two aspects: raising of interest rates and reduction of the size of central bank balance sheet. However, it is undisputed that the exit strategies of the ECB could be implemented only after completing of the asset purchase program and stabilization of euro area public finances. It seems that at this moment the monetary policy of Eurozone will have to wait. The main aim of the study is to identify the determinants of the monetary policy normalization of the European Central Bank. Particular attention will be paid to the conditions of normalization relating to the support for creation of economic recovery in the euro area, the increase of inflation towards the inflation target, stimulation of dynamics of lending activity and the situation on the financial market. The following research methods will be used: the literature studies, including domestic and foreign literature, case studies, cause and effect analysis, observation analysis as well as synthesis analysis. 

scholarly journals Comparison of the Approach of the Czech National Bank and the European Central Bank to the Effects of the Global Financial Crisis

2021 ◽  
Vol 10 (2) ◽  
pp. 18-46
Author(s):  
Andrea Cecrdlova
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Financial Crisis ◽  
Central Bank ◽  
European Central Bank ◽  
Global Financial Crisis ◽  
Central Banks ◽  
European Central ◽  
National Bank ◽  
The Global Financial Crisis

The latest global crisis, which fully erupted in 2008, can have a significant impact on central banks credibility in the long run. During the last crisis, monetary authorities encountered zero interest rate levels and, as a result, started to use non-standard monetary policy instruments. The Czech National Bank decided to use a less standard instrument in November 2013, when it started to intervene on the foreign exchange market in order to keep the Czech currency at level 27 CZK / EUR. However, the European Central Bank also adopted a non-standard instrument, when chose a path of quantitative easing in 2015 in order to support the euro area economy by purchasing financial assets. The question remains whether the approach of Czech National Bank or the approach of European Central Bank in the crisis and post-crisis period was a more appropriate alternative. With the passage of time from the global financial crisis, it is already possible to compare the approaches of these two central banks and at least partially assess what approach was more appropriate under the given conditions. When comparing the central banks approaches to the crisis, the Czech National Bank was better, both in terms of the rate of interest rate cuts and the resulting inflation with regard to the choice of a non-standard monetary policy instrument. The recent financial crisis has revealed the application of moral hazard in practice, both on behalf of the European Central Bank and the Czech National Bank, which may have a significant impact on their credibility and independence in the coming years.

scholarly journals ECB policy responses between 2007 and 2014: A chronological analysis and an assessment of their effects

2016 ◽  
Vol 63 (4) ◽  
pp. 455-473 ◽  
Author(s):  
Carlos Rodríguez ◽  
Carlos Carrasco
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Lender Of Last Resort ◽  
Policy Responses ◽  
The One ◽  
The Global Financial Crisis

The paper analyses the monetary policy responses of the European Central Bank (ECB) to the global financial crisis and the European sovereign debt crisis. Our goals are on the one hand to explain chronologically the main measures in conventional and unconventional policies adopted by the ECB and on the other hand to analyse their effects on key interest rates, monetary aggregates and the money multiplier. The assessment is that the ECB?s monetary policy responses to the crisis have been ?too little, too late?, constrained by the institutional framework, which prevents the ECB from acting as a true central bank with the role of lender of last resort.

Section 6 The European Central Bank

2019 ◽  
Author(s):  
Marcus Klamert ◽  
Manuel Kellerbauer ◽  
Jonathan Tomkin
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
European Central Bank ◽  
Primary Objective ◽  
Price Stability ◽  
European Central

Article 282 provides for the ESCB, consisting of the ECB together with the NCBs (NCBs). Within the ESCB, the Eurosystem, comprised of the ECB and the NCBs of MS whose currency is the euro, conducts the Union’s monetary policy. The primary objective of the ESCB is to maintain price stability. The ECB is charged with authorizing the use of the euro and is independent in all respects.

scholarly journals The price stability oriented monetary policy of the European Central Bank

2010 ◽  
Vol 13 (3) ◽  
pp. 5-15
Author(s):  
Wojciech Gasiński ◽  
Anna Misztal
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
European Central Bank ◽  
Central Banks ◽  
Primary Objective ◽  
Price Stability ◽  
Economic Policies ◽  
European Central ◽  
Consumer Prices ◽  
European System

The aim of this paper is to present the price stability oriented monetary policy of the European Central Bank. The European Central Bank began activities in 1998 and the primary objective of the European System of Central Banks is to maintain price stability and the ESCB should also support the general economic policies in the Community. Monetary policy is a special tool that national governments and central banks uses to influence on its economy, especially to control the supply of money and to influence on the level of economic indicators. This paper investigates the assumed objective of the European System of Central Banks which is to maintain price stability. What is more, we would like to present the monetary policy strategy of the European Central Bank and analysis of the Harmonized Index of Consumer Prices.

ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE CONTEXT OF THE SECURITY OF THE EUROPEAN FINANCIAL SYSTEM

2016 ◽  
Vol 4 (2) ◽  
pp. 0-0
Author(s):  
Sylwia Gwoździewicz ◽  
Dariusz Prokopowicz ◽  
Daniel Szybowski
Keyword(s):  
European Union ◽  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Financial System ◽  
The European Union ◽  
Assistance Programs ◽  
European Central ◽  
Low Interest Rates

The development of market financial system in Poland was determined to a large extent, globally operating processes of the situation on the financial markets and the processes of adaptation to the normative standards and technological European Union. As part of anti-crisis measures leading central banks, Anglo-Saxon and European financial system have launched a high-budget system, interventionist assistance programs. Finally, the cost of rescuing the financial system was thrown to the proverbial John Doe ie. Most numerous segment of bank customers. Currentlyperformed research carried out in previous years, interventionist government programs to rescue the anti-crisis measures of the key players of the economy from bankruptcy financial and activation of demand, investment, production and liquidity in the credit market. In terms of development-oriented activities of government intervention, the European Central Bank continues to apply mild monetary policy of low interest rates in order to improve liquidity in the financial system and offering cheap money for the development of pro-investment share of credit of commercial banks operating in the European Union.

Großbritannien – ein europäischer Spielverderber? Das britische Opting-Out aus ökonomischer Sicht

1996 ◽  
Vol 45 (3) ◽  
Author(s):  
Philip Nölling
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Short Term ◽  
Economic Reason ◽  
Opting Out ◽  
European Central ◽  
The Uk

AbstractWith the beginning of EMU there will be only one monetary policy with a single short term interest rate. In order for common monetary policy to be successful EMU member states have to react similarly to monetary signals from the European Central Bank (ECB). Because of its unique sensitivity to short term interest rates, this would not be the case for the UK. If, for example, the ECB would raise the short term interest rates by an amount which is appropriate for countries like France and Germany, the UK might sink into recession. This shows that besides political reasons there is also an economic reason for the UK’s opting-out from EMU.

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