Low for how long? Estimating the ECB’s “Extended Period of Time”

Tilman Bletzinger, Volker Wieland, 5 September 2013

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The ECB Governing Council has given hints that it will keep rates low for long (see its May and June statements). On 4 July 2013, the Council went further embracing ‘forward guidance’ (Praet 2013, Woodford 2013).1

Topics: Monetary policy
Tags: ECB, forecast, monetary rule

Europe’s banking problem through the lens of secular stagnation

Jan Willem van den End , Jakob de Haan, 28 March 2014

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What is the economy’s new normal? Will it be secular stagnation as suggested by Summers (2013)? According to this view, the economy will be in a permanent state of recession because aggregate demand is below potential output. As the actual real interest rate exceeds the negative equilibrium real interest rate (the natural rate), investment activity is too low.

Topics: Financial markets, Monetary policy
Tags: balance sheets, ECB, secular stagnation

Considering QE, Mario? Buy US bonds, not Eurobonds

Jeffrey Frankel, 24 March 2014

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The ECB should further ease monetary policy. Inflation at 0.8% across the Eurozone is below the target of ‘close to 2%’, and unemployment in most countries is still high. Under the current conditions, it is hard for the periphery countries to bring their costs the rest of the way back down to internationally competitive levels as they need to do.

Topics: Macroeconomic policy, Monetary policy
Tags: ECB, euro, quantitative easing

TARGET balances, Bretton Woods, and the Great Depression

Michael Bordo, 21 March 2014

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During the Eurozone crisis, an analogy was made between the events in Europe between 2007 and 2012 and the collapse of the Bretton Woods System between 1968 and 1971. There has been a build-up of TARGET liabilities since 2007 by some central banks (notably Greece, Ireland, Portugal, and Spain, or the ‘GIPS’), and of TARGET assets by Germany and others.

Topics: Economic history, International finance
Tags: Bretton Woods, Central Banks, ECB, euro, Eurosystem, eurozone, Eurozone crisis, financial crisis, global imbalances, Great Depression, TARGET

German Court decision: Legal authority and deep power implications

Katharina Pistor, 26 February 2014

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Can the European Central Bank legally act as lender of last resort to ensure the survival of the euro?

Topics: EU institutions
Tags: ECB, Eurozone reform

The unpleasant legacy of the crisis: public debt and low trend growth in the Eurozone

Nicholas Crafts interviewed by Viv Davies, 21 Jan 2014

Nicholas Crafts talks to Viv Davies about his recent work on the threatening issue of public debt in the Eurozone. Crafts maintains that the implicit fault line in the EZ is evident; several EZ economies face a long period of fiscal consolidation and low growth and that a different sort of central bank might be preferable. They also discuss the challenges and constraints of banking, fiscal and federal union. The interview was recorded in London on 17 January 2014.

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See Also

Crafts, N (2013b), “Saving the Euro: a Pyrrhic Victory?”, CAGE-Chatham House Policy Briefing Paper No. 11.

Transcript

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Topics: Economic history, Macroeconomic policy
Tags: debt monetisation, ECB, eurozone, financial repression, fiscal consolidation, gold standard, public debt

Single supervision and resolution rules: Is ECB independence at risk?

Donato Masciandaro, Francesco Passarelli, 21 December 2013

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A successful transition to a European Banking Union requires robust and credible ‘Chinese walls’ between the ECB’s role as monetary authority and any responsibility in the Single Supervisory Mechanism or in the resolution rules. Otherwise, the ECB’s independence would be at risk, given that monetary policy would likely have larger distributional effects.

Topics: EU institutions, Financial markets
Tags: bank resolution, banking regulation, banking union, central bank independence, Central Banks, ECB, global financial crisis

The Eurozone: If only it were the 1930s

Nicholas Crafts, 13 December 2013

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The 1930s deservedly have a bad name. It is hard to imagine that a decade that included the Great Depression and a major de-globalisation of the world economy, and culminated in WWII could be other than notorious. And yet, compared with struggling Eurozone economies today, the economic situation in Europe in the later 1930s was in many ways more promising.

Topics: Economic history, Macroeconomic policy
Tags: debt monetisation, ECB, eurozone, financial repression, fiscal consolidation, gold standard, public debt

Currency wars and the euro

Jens Nordvig, 25 November 2013

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A new battle for the ECB to fight

Last year, the ECB entered an existential battle for the euro. By promising to do ‘whatever it takes’ to safeguard the euro, the ECB managed to calm sovereign debt markets and engineer a much-needed easing of overall credit conditions in the Eurozone.

Topics: EU institutions, Exchange rates, Monetary policy
Tags: Bundesbank, Currency wars, ECB, euro, eurozone, unemployment

Banking union for Europe – where do we stand?

Thorsten Beck, 23 October 2013

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In a few days, pending some last-minute diplomatic conflict between the UK and the European Commission, the ECB will begin an asset-quality review of European banks. This is supposed to be the entry point to the supervisory role of the ECB in the context of the Single Supervisory Mechanism (SSM), the first of three pillars of the planned banking union.

Topics: EU institutions, Global crisis
Tags: ECB, eurozone, monetary union

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