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

A balance sheet view on TARGET – and why restrictions on TARGET would have hit Germany first

Clemens Jobst 19 July 2011

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By now most readers of European financial newspapers and blogs will have come across Hans-Werner Sinn’s repeated assertions (see Sinn 2011a and 2011b on this site and his latest here) about Germany’s “stealth bailout” of European peripheral economies and the “ticking time bomb” hidden in the €300 billion claims of the Bundesbank in the Eurozone payment system

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Topics:  EU policies Europe's nations and regions International finance

Tags:  Germany, ECB, Bundesbank, Central Banks, Eurozone crisis, TARGET

ECB Reaction Functions and the Crisis of 2008

Stefan Gerlach, John Lewis,

Date Published

Mon, 07/04/2011

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ECB, reaction functions, smooth transition and Zero Lower Bound

Should the ECB use core inflation as a signal for medium-term inflation?

Michele Lenza, Lucrezia Reichlin 24 June 2011

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In the last few weeks the press and several blogs have been engaged in a debate on the classic question of whether central banks should rely on headline inflation or core inflation (defined as headline inflation excluding energy and food) to obtain a signal for medium-term inflationary pressures. The debate, this time, was started by a Financial Times article by Lorenzo Bini Smaghi, board member of the ECB (Smaghi 2011).

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Topics:  EU policies Monetary policy

Tags:  ECB, headline inflation, core inflation

The ECB’s three mistakes in the Greek crisis and how to get sovereign debt right in the future

Jeffrey Frankel 16 May 2011

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By now just about everybody agrees that the European bailout of Greece has failed (see for example Darvas et al. 2011). The debt will have to be restructured. As has been evident for well over a year, it is not possible to think of a plausible combination of Greek budget balance, sovereign risk premium, and economic growth rates that imply anything other than an explosive path for the future ratio of debt to GDP.

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Topics:  EU policies Europe's nations and regions

Tags:  ECB, Greece, Fiscal crisis, Eurozone crisis

The troika should target the trade and the income balance deficits

Ricardo Cabral 15 May 2011

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Greece, then Ireland, and more recently Portugal have applied for EU and IMF financial aid. A troika of European Commission, ECB, and IMF officials have negotiated accords for ambitious adjustment programmes with either two or three main components, as mandated by the Eurogroup and the Ecofin Ministers (2010a; 2010b; 2011):

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Topics:  EU policies Europe's nations and regions

Tags:  ECB, IMF, Eurozone crisis, financial aid

Vox’s annual break and some holiday reading tips

Richard Baldwin 25 December 2010

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After months of preparatory work, Vox was launched in June 2007. The first weeks were going well – and then the subprime crisis struck.

The subprime crisis establishes Vox’s niche

On the 9th, 10th, and 13th of August 2007, the US Fed injected a total of $38 billion into the US banking system; simultaneously, the ECB injected ten times that much into Europe’s banking system.

This action – which made headlines around the world – seemed inexplicable.

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Topics:  Frontiers of economic research

Tags:  ECB, subprime crisis, global crisis, Eurozone crisis

The European debt crisis: Worrisome delusions

Charles Wyplosz 19 December 2010

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Lorenzo Bini-Smaghi – Member of the ECB's Executive Board – has produced a brilliant defence of the no-default strategy currently pursued by the Eurozone authorities (Financial Times 2010).

His arguments are straightforward.

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Topics:  EU institutions

Tags:  ECB, eurozone, Debt crisis

All together now? Arguments for a big-bang solution to Eurozone problems

Daniel Gros 05 December 2010

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I hope that everything I write in this column turns out to be irrelevant; I very much hope that it will not be necessary to resort to such drastic actions. Economic logic, however, suggests that it might soon represent the least bad solution to a crisis which keeps getting worse. That said…

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Topics:  Global crisis

Tags:  ECB, Eurozone crisis, sovereign restructuring

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