Introduction

2017 ◽  
Author(s):  
C. Randall Henning
Keyword(s):  
Euro Area ◽  
European Central Bank ◽  
International Political Economy ◽  
Euro Crisis ◽  
European Monetary ◽  
Member States ◽  
European Central ◽  
Regime Complex ◽  
The International Monetary Fund ◽  
European Monetary Fund

European governments, against their initial instincts, invited the International Monetary Fund to design financial rescue programs during the euro crisis in cooperation with the European Commission and European Central Bank. These institutions, known as the “troika,” constitute a regime complex in the parlance of international political economy. This book poses four questions about the regime complex for crisis finance in the euro area: Why did European governments choose this particular mix of institutions? What was the strategy of key member states in directing several institutions to collaborate on lending programs? Why did this arrangement endure despite severe conflicts among the institutions? Should the member states of the euro area “go it alone” by creating a European Monetary Fund? This chapter elaborates on these questions and provides an overview of the book.

Spain and Italy

2017 ◽  
Author(s):  
C. Randall Henning
Keyword(s):  
Monetary Union ◽  
Euro Area ◽  
European Central Bank ◽  
Banking System ◽  
Institutional Arrangement ◽  
Member States ◽  
European Central ◽  
Fiscal Austerity ◽  
Economic Size ◽  
The International Monetary Fund

Spain and Italy posed threats to the integrity of the monetary union that were a magnitude greater than those posed by the previous crisis countries. Owing in part to actions by the European Central Bank, the program for Spain could be limited nominally to its banking system, while Italy could avoid a program altogether. The Spanish program’s institutional arrangement is best understood as a variation on, rather than a rejection of, the troika. It was linked to Spain’s commitment to fiscal austerity and structural reform, while the International Monetary Fund was involved in program design and monitoring. Political affinity between the governments of Spain and Germany and the economic size of Spain explain the choice of the institutional arrangement. Owing to Spain’s size, the IMF would have required adjustments in euro-area policies to which member states and the ECB were not willing to agree. Key member states were thus pivotal in defining the roles of the institutions.

New Facilities and Institutions

2017 ◽  
Author(s):  
C. Randall Henning
Keyword(s):  
Member State ◽  
Euro Area ◽  
Institutional Arrangements ◽  
European Monetary ◽  
Research Institutes ◽  
European Stability Mechanism ◽  
The International Monetary Fund ◽  
European Monetary Fund ◽  
New Facilities ◽  
Political Matter

As the crisis evolved, euro-area governments first constructed two transitional financial facilities and then created a permanent fund. This chapter reviews the creation of the financial facilities of the euro area culminating in the establishment of the European Stability Mechanism. The ESM treaty contains a strong presumption, but not a strict legal requirement, that the International Monetary Fund (IMF) will also be involved in assistance to a member state. As a political matter, the Fund’s involvement is strongly favored in creditor countries of the euro area. The emergence of the ESM, a new institutional player in crisis finance, prompted a reconsideration of the institutional arrangements under which crisis programs are designed. The chapter reviews proposals from research institutes and the European Parliament to combine resources of the European Commission and the ESM into a European Monetary Fund.

Dramatis Institutiones

2017 ◽  
Author(s):  
C. Randall Henning
Keyword(s):  
European Union ◽  
Central Bank ◽  
International Monetary Fund ◽  
Euro Area ◽  
European Central Bank ◽  
The European Union ◽  
European Central ◽  
Regime Complex ◽  
Basic Facts ◽  
Institutional Conflict

The regime complex for crisis finance in the euro area included the European Council, Council of the European Union, and Eurogroup in addition to the three institutions of the troika. As the member states acted largely, though not exclusively, through the council system, these bodies stood at the center of the institutional mix. This chapter reviews the institutions as a prelude to examining the dilemmas that confronted them over the course of the crises. It presents a brief review of some of the basic facts about their origins, membership, and organization. Each section then delves more deeply into these institutions’ governance and principles to understand their capabilities and strategic challenges. As a consequence of different mandates and design, the European Commission, European Central Bank, and International Monetary Fund diverged with respect to their approach to financing, adjustment, conditionality, and debt sustainability. This divergence set the stage for institutional conflict in the country programs.

scholarly journals Instruments for Supporting Members of the Eurozone in Overcoming the Financial Crisis Utilised by The International Monetary Fund Using the Example of Greece

2020 ◽  
Vol 7 (2) ◽  
pp. 123-146
Author(s):  
Agnieszka Wicha
Keyword(s):  
Financial Crisis ◽  
Central Bank ◽  
International Monetary Fund ◽  
Euro Area ◽  
European Central Bank ◽  
Efficient Operation ◽  
European Central ◽  
The International Monetary Fund ◽  
Of Greece ◽  
The Imf

The purpose of this article is to present the instruments and resources used by the International Monetary Fund to support the euro area countries in overcoming the financial crisis on the example of Greece. The article points out types of loan instruments and other measures taken by the IMF to support Greece. The author also indicates the reforms that had to be made at the IMF for a better and more efficient operation of this institution against the challenges of the global crisis. In addition, the specificity of cooperation between the IMF, the European Commission and the European Central Bank is analyzed.

Euro Crisis in a Nutshell

2017 ◽  
Author(s):  
C. Randall Henning
Keyword(s):  
Financial Markets ◽  
European Central Bank ◽  
Central And Eastern Europe ◽  
Banking Union ◽  
Euro Crisis ◽  
European Central ◽  
European Institutions ◽  
Modus Vivendi ◽  
The International Monetary Fund ◽  
Country Specific

This chapter provides an overview of the origins and evolution of the euro crisis as a whole, as the backdrop to examining the country-specific financial rescue programs. It reviews the economics of the crisis and governments’ loss of access to financial markets during the acute phase, 2010–13. The chapter addresses the overall response to the crisis on the part of the European institutions and euro-area member states, best characterized as “muddling through.” The response nonetheless bought time for the introduction of unconventional monetary policy on the part of the European Central Bank and of new financial facilities and steps toward banking union on the part of governments. The chapter then reviews the design of the programs for countries in Central and Eastern Europe, especially for Latvia, over which the European Commission and the International Monetary Fund clashed strongly. The two institutions began to work out their modus vivendi during these early programs, precursors to the euro crisis.

The EU’s Most Influential Economic Policy-maker: Mario Draghi at the European Central Bank

2020 ◽  
Vol 31 (1) ◽  
pp. 345-352
Author(s):  
Michael Waibel
Keyword(s):  
Central Bank ◽  
Euro Area ◽  
Sovereign Debt ◽  
European Central Bank ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
Member States ◽  
Asset Price Bubbles ◽  
European Central ◽  
Economic Policy Maker

Abstract This article assesses the legacy of Mario Draghi as president of the European Central Bank (ECB) from 2011 to 2019, with particular reference to the Greek’s sovereign debt crisis. Most macro-economic indicators improved over the course of Draghi’s tenure at the ECB, including inflation, budget deficits, yield spreads among euro-area borrowers and unemployment. Draghi played a decisive role in turning the tide on the crisis of confidence that afflicted the euro area and threatened the survival of Europe’s single currency in the wake of Greece’s sovereign debt crisis. Yet the ECB’s unconventional policies prompted sustained controversy and contributed to a low level of trust in the central bank among people in the euro-area member states. The focus of controversy has been on possible asset-price bubbles and ‘hidden’ transfers between euro-area member states. When and how to normalize its policies is a major challenge for the ECB, as it is for other major central banks that adapted similar policies in response to the global financial crisis.

The ECB’s quantitative easing programme as a constitutional game changer

2019 ◽  
Vol 26 (1) ◽  
pp. 94-107
Author(s):  
Klaus Tuori
Keyword(s):  
Monetary Policy ◽  
Public Sector ◽  
Central Bank ◽  
Euro Area ◽  
European Central Bank ◽  
Central Banking ◽  
Quantitative Easing ◽  
Member States ◽  
The Public ◽  
European Central

The European Central Bank started its quantitative easing programme in 2015 in order to support euro area financial conditions and ultimately increase inflation. The controversial Public Sector Purchase programme has resulted in central bank purchases of government bonds in the magnitude of €2.1 trillion and the Eurosystem (the European Central Bank and the national central banks) become the largest creditor to the euro area Member States. The constitutional framework of the European Central Bank did foresee such a programme, which also makes it potentially problematic for the European Central Bank’s accountability. The underlying source for constitutional concerns is the European Central Bank’s exceptional independence, which could be justified with a narrow central banking model, but becomes problematic when the European Central Bank’s influence on the society becomes more multifaceted, which blurs the borderlines between monetary policy and other economic policies. The specific constitutional concerns related to the Public Sector Purchase programme and accountability are highlighted by three claims: (a) With the Public Sector Purchase programme, the European Central Bank takes deeper inroads to the society than with traditional monetary policy; (b) Through the Public Sector Purchase programme, the European Central Bank became the largest creditor to Member States it was not allowed to finance; and (c) The Public Sector Purchase programme can lead to conflicts between the price stability objective and financial stability.

MONETARY POLICY SWITCHING IN THE EURO AREA AND MULTIPLE STEADY STATES: AN EMPIRICAL INVESTIGATION

2016 ◽  
Vol 21 (5) ◽  
pp. 1175-1188 ◽  
Author(s):  
Gilles Dufrénot ◽  
Guillaume A. Khayat
Keyword(s):  
Steady State ◽  
Euro Area ◽  
European Central Bank ◽  
Empirical Investigation ◽  
Standard Assumption ◽  
Demand Shock ◽  
Liquidity Trap ◽  
European Central ◽  
Parameter Values ◽  
Policy Function

This paper investigates, in the case of the euro area, the standard assumption that the liquidity trap steady state, which arises from the existence of the zero lower bound on the nominal interest rate, is locally unstable. We show that the policy function of the European Central Bank (ECB) is described by a nonlinear Taylor rule. Then, using our estimations, we show that around the liquidity trap steady state the equilibrium is locally determinate for most plausible parameter values. Finally, we find that an inflation shock is more efficient than a demand shock to escape the liquidity trap steady state.

scholarly journals The Binding Force of Babel: The Enforcement of EC Law Unpublished in the Languages of the New Member States

2007 ◽  
Vol 9 ◽  
pp. 43-80 ◽  
Author(s):  
Michal Bobek
Keyword(s):  
European Union ◽  
Central Bank ◽  
European Central Bank ◽  
The European Union ◽  
Member States ◽  
Community Law ◽  
New Member States ◽  
European Central ◽  
Binding Force ◽  
Ec Law

On 1 may 2004, 10 new Member States joined the European Union. This meant inter alia that, save for the express derogations provided for in the Act of Accession, the entire mass of Community secondary legislation became binding in the new Member States. This principle of the immediate effects of Community law in the new Member States was provided for in Article 2 AA: From the date of Accession, the provisions of the original Treaties and the acts adopted by the institutions and the European Central Bank before Accession shall be binding on the new Member States and shall apply in those States under the conditions laid down in those Treaties and in this Act.

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