What effects have the recent exceptional monetary policy interventions had on loans and unemployment, and what are the possible effects of phasing them out? This column provides quantitative estimates for the Eurozone, arguing that that the exceptional policies affect the economic via the spread between the policy rate and the market rate on overnight deposits rather than through their effect on the monetary base.
Michele Lenza, Lucrezia Reichlin, 16 February 2010
Emil Stavrev, Martin Cihák, Thomas Harjes, 15 January 2010
The global crisis forced central banks to take unconventional measures. This column says that the ECB’s “enhanced credit support” helped support the transmission of monetary policy by reducing money market term spreads. The substantial increase in the ECB’s balance sheet also likely contributed to a reduction in government bond term spreads and a somewhat flatter yield curve.
Sylvester Eijffinger, 24 October 2009
Governments are restructuring their financial supervision systems. This column warns that the proposed new structure for European financial supervision is poorly coordinated and will not help in a systemic crisis. It discusses how the ECB might coordinate macro-prudential supervision in the euro area.
Giorgio Barba Navaretti, Giacomo Calzolari, Guido Ferrarini, Alberto Pozzolo, 08 April 2009
The crisis has brought multinational banks and their cross-border activities to the forefront of European regulatory concerns. This column argues that such banks are critical to successful EU financial integration and says that the appropriate response is to establish multinational regulation to match multinational banks. It proposes a European System of Banking Supervision and harmonisation of regulating banking groups.
Lans Bovenberg, Coen Teulings, 04 April 2009
Some analysts have argued that the European is poorly positioned to address the crisis since its economic integration has outpaced its integration of politics and governance. This column says that, in the face of the crisis, Europe must now decide between political integration and economic disintegration. It argues for EU-wide banking reforms, financial regulation, macroeconomic policies, and global coordination.
Carmine Di Noia, Stefano Micossi, 01 April 2009
What are feasible policy responses to the crisis? This column argues for simple but significant changes in international imbalances, financial regulation, global coordination, and micro-prudential regulation.
Willem Buiter, 25 March 2009
The last column in this series on fiscal aspects of central banking reviews the differences in fiscal backing for the Bank of England, the US Federal Reserve, and the European Central Bank.
Willem Buiter, 25 March 2009
The third column in this series discusses the ECB’s lack of fiscal backing in detail and suggests three ways in which it might be provided by EU governments.
Willem Buiter, 24 March 2009
The second of this four-column series on fiscal aspects of central banking discusses the institutional constraints on quantitative easing. It argues that the ECB can and should engage in quantitative easing since its independence gives it a credible non-inflationary exit strategy. The Fed, however, seems heading for a bout of inflation stemming from Congressional pressure. Buiter argues that the Bank of England’s situation lies between.
Willem Buiter, 08 May 2010
First published on 24 March 2009, this column is more relevant than ever. In it Willem Buiter argues that the ECB’s lack of fiscal backing is both unusual among major central banks and a severe handicap – it is a factor in why the ECB is “fiddling while the Eurozone burns” by hesitating to undertake quantitative easing started by the Fed, Bank of England, and others.
Barry Eichengreen, 20 January 2009
2008 was the year of asymmetric financial shocks for the Eurozone, but 2009 will be the year of the symmetric economic shock. All of Europe is slipping simultaneously towards recession and the threat of deflation. Here one of the world’s leading international economists explains that a common monetary policy response is optimal. Euro interest rates should be cut to zero and quantitative easing undertaken, all complemented by fiscal expansion by Eurozone nations that can afford it. What started as the euro’s greatest challenge could be its salvation, but only if policy makers act swiftly.
Jeffrey Frankel, 24 December 2008
Trade among euro members has increased 10-15% since the introduction of the euro, a far smaller effect than estimated prior to the currency's introduction. What explains the discrepancy between the European experience and previous history? This column explores the difficulty of explaining the difference.
Marco Buti, Vitor Gaspar, 24 December 2008
This column looks back at the first ten years of the euro, from the uncertainty surrounding its adoption to the one caused by the current crisis. In between, the euro proved a resounding success. It is worth remembering the magnitude of the original challenge in order to use the crisis as an opportunity to strengthen European governance.
John Muellbauer, 27 October 2008
The current financial crisis will probably lead to an unnecessarily deep recession. This column suggests that European central banks, misguided by outdated econometric models, should have cut rates faster and deeper in a coordinated fashion. They should now scrap these models and agree on a large, coordinated cut of 2 percentage points.
Daniel Gros, Stefano Micossi, 20 September 2008
The radical moves in the US have direct implications for European banks and indirect implications for European governments. This column discusses the likely channels and notes that several European banks are both too big to fail and may be too big to be saved by their national governments alone.
Petra Geraats, Francesco Giavazzi, Charles Wyplosz, 09 September 2008
Recent data suggest that the ECB’s credibility is worryingly low on the inflation-fighting front. This column explains how improved ECB transparency and communication could help it to regain credibility with markets and investors.
Christopher Crowe, Ellen Meade, 27 July 2008
The European Central Bank is under fire from Nicholas Sarkozy. This column introduces a new set of measures of central bank independence and transparency, which shows that the ECB is markedly more transparent than the Eurozone members’ central banks were in the 1990s.
Alan Ahearne, Juan Delgado, Jakob von Weizsäcker, 27 June 2008
Housing booms associated with credit booms are particularly damaging, but the ECB’s one-size-fits-all monetary policy is useless in pricking national bubbles. Euro area governments should use national banking regulations to dampen national bubbles and countercyclical housing taxes to prick bubbles that arise.
Guido Tabellini, 23 June 2008
The ECB and the Fed are pursuing very different policies on inflation fighting and the use of monetary aggregates in guiding policy. One of Italy’s leading economists argues that either the ECB or the Fed is making a mistake.
Francesco Giavazzi, 02 June 2008
Editor's Note: Originally posted 2 June 2008. There has been a persistent spread between the rate at which banks lend each other money and government-backed securities yields in recent months. This column describes hypotheses explaining the spread – including the possibility that banks aren’t lending in order to bankrupt acquisition targets.