The Greek revolt: Good news for Europe

Charles Wyplosz 04 November 2011

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The Greek revolt, even if short lived, is good news on the European crisis front – it might provoke the long-awaited policy turnaround that is necessary to end the Eurozone crisis. It may finally awaken EZ leaders to the futility of the path they’ve chosen.  Cherry on the pie: the unexpected interest rate cut by the ECB signals the advent of a less dogmatic central bank in the face of an impending recession.

The Greeks have a point

Greek sovereignty has been trampled over again and again.

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Topics:  Europe's nations and regions Financial markets Politics and economics

Tags:  ECB, default, Greece, Eurozone crisis, debt restructuring

European summits in ivory towers

Paul De Grauwe 26 October 2011

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Imagine an army going to war. It has overwhelming firepower. The generals, however, announce that they actually hate the whole thing and that they will limit the shooting as much as possible. Some of the generals are so upset by the prospect of going to war that they resign from the army. The remaining generals then tell the enemy that the shooting will only be temporary, and that the army will go home as soon as possible. What is the likely outcome of this war? You guessed it. Utter defeat by the enemy.

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Topics:  EU institutions International finance Monetary policy

Tags:  ECB, inflation targeting, Eurozone crisis, EFSF

Resolving the current European mess

Charles Wyplosz 25 October 2011

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Editors' note: This column forms part of a VoxEU.org eBook 'The Future of Banking', to be published on Tuesday 25 October.

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Topics:  EU institutions EU policies International finance

Tags:  ECB, eurozone, sovereign debt, EFSF

Capping interest rates to stop contagion in the Eurozone

Bernard Delbecque 17 October 2011

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A straightforward solution to stop contagion would be to appoint the ECB as a lender of last resort in the government bond markets (Wyplosz 2011a). By making it clear that it is fully committed to exert this function, the ECB would restore confidence in the markets.

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Topics:  EU institutions EU policies

Tags:  ECB, contagion, Eurozone crisis, EFSF

A failsafe way to end the Eurozone crisis

Charles Wyplosz 26 September 2011

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The annual gathering of finance ministers and central bank governors at the IMF/World Bank meetings in Washington seems to have been an epiphany for Eurozone leaders. Finally, there seems to be agreement that their July 2011 agreement was insufficient (Reuters 2011).

In a previous Vox column, I sketched a way of stopping the public debt crisis that is engulfing the Eurozone (Wyplosz 2011). Here I develop this idea into a coherent proposal that, if adopted, would immediately stop the rot.

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Topics:  Global crisis

Tags:  ECB, moral hazard, Eurozone crisis, EFSF, debt guarantee

The damaged ECB legitimacy

Anne Sibert 15 September 2011

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The ECB’s role has evolved in its decade-long existence. In this note I describe how the choices of the ECB have damaged the institution’s legitimacy. This matters because decreased legitimacy lowers the ECB’s future policy effectiveness and weakens the legitimacy of all other institutions of governance in the EU, including the European Commission, the European Court of Justice, and the European Parliament.

In evaluating the ECB’s performance, I split the last eight years into two parts:

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Topics:  EU policies Europe's nations and regions Global crisis Institutions and economics

Tags:  ECB, transparency, Eurozone crisis

Why a slowdown in Germany could be good for Europe

Francesco Giavazzi, Alberto Alesina 01 September 2011

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Paradoxically, the slowing down of the German economy could be a blessing for the euro – and a boost to the probability that the euro survives the crisis.

Until a few weeks ago, the Eurozone economies seemed to be moving in different directions.

  • Germany was growing at a swift rate with a solid fiscal stance.
  • The southern economies (Greece, Italy, Spain, and Portugal) were – and still are – not growing and in a fiscal mess.

This situation created headaches for the ECB.

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Topics:  EU policies Europe's nations and regions Monetary policy

Tags:  Germany, ECB, Eurozone crisis

The European Central Bank as a lender of last resort

Paul De Grauwe 18 August 2011

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In October 2008 the ECB discovered that there is more to central banking than price stability. This discovery occurred when it was forced to massively increase liquidity to save the banking system. The ECB did not hesitate to serve as lender of last resort to the banking system, despite fears of moral hazard, inflation, and the fiscal implications of its lending.

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Topics:  EU policies

Tags:  ECB, lender of last resort, Eurozone crisis

August 2011: The euro crisis reaches the core

Daniel Gros 11 August 2011

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Canaries were kept in coal mines because they die faster than humans when exposed to dangerous gases. When the birds stopped singing, wise miners knew that it was time to gear up the emergency procedures.

Greece, as it turns out, was the Eurozone’s canary. The canary was resuscitated and a small rescue mechanism was set up to revive a further canary or two – but beyond this the warning was ignored. The miners kept on working. They convinced themselves that this was the canary’s problem.

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Topics:  Global crisis

Tags:  ECB, EFSF, Eurozone Debt Crisis

They still don’t get it

Charles Wyplosz 25 October 2011

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Editor's note: This column updates the column originally posted on 8 August 2011.

 

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Topics:  EU institutions

Tags:  ECB, sovereign default, Eurozone crisis

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