Intra-eurozone Payments Imbalances: Implications for the TARGET2 Payments System

2017 ◽  
Vol 49 (3) ◽  
pp. 343-357
Author(s):  
Bill Lucarelli
Keyword(s):  
Fiscal Federalism ◽  
European Central Bank ◽  
Debt Crisis ◽  
Jel Classification ◽  
Transfer System ◽  
Political Union ◽  
Real Possibility ◽  
European Central ◽  
The Core ◽  
Payments System

In the wake of the recent European debt crisis, there have emerged serious payments imbalances between the core/surplus countries and the peripheral/deficit countries, which threaten the internal cohesion of the eurozone. In the absence of political union or fiscal federalism, these centrifugal dynamics appear to be irreversible. This article examines the role performed by the TARGET2 (Trans-European Automated Real Time Gross Settlement Express Transfer System) payments system and the very real possibility of default by the indebted, peripheral countries as a result of the imposition of austerity policies by the European Central Bank (ECB)/European Union (EU)/International Monetary Fund (IMF) (Troika). It is proposed that the current, neoliberal path toward austerity and wage repression (or internal devaluation) is ultimately unsustainable and, indeed, self-defeating. JEL Classification: B5, B14, B16, B23

scholarly journals Out of the comfort zone? The ECB, financial assistance, independence and accountability

2019 ◽  
Vol 26 (1) ◽  
pp. 108-121
Author(s):  
Paul Dermine
Keyword(s):  
Debt Crisis ◽  
Financial Assistance ◽  
Economic And Monetary Union ◽  
Eurozone Crisis ◽  
Comfort Zone ◽  
European Central ◽  
The Core ◽  
Policy Fields ◽  
Redistributive Effects ◽  
Institutional Architecture

The European debt crisis (Eurozone crisis) precipitated an unprecedented reconfiguration of the institutional architecture of the Economic and Monetary Union. At the core of such overhaul was the establishment of a financial assistance function specific to the Eurozone. From the outset, there has been a clear will to closely involve the European Central Bank (ECB) at all stages of the operation of this new function. The ECB, an institution endowed with a monetary mandate, has thus entered the field of economic policy. Against that background, this paper intends to investigate the legal and political accountability arrangements the ECB is subject to in that new context. Both the texts organizing the intervention of the ECB and its subsequent practice reveal, so the paper will show, that the ECB’s action in that particular context is mainly conceived as falling under its monetary mandate, and thus as being covered by its independence. The paper will argue that this situation is legally problematic, especially in view of the deep interpenetration between the economic and the monetary policy fields and the redistributive effects of the choices made. It will also claim that the ECB’s independence in that particular context, and the accountability structures it is subject to, should be adjusted.

Anatomy of a “Holding Operation”

2019 ◽  
pp. 235-250
Author(s):  
Jerome Roos
Keyword(s):  
Central Bank ◽  
European Central Bank ◽  
Banking Crisis ◽  
Sovereign Default ◽  
High Concentration ◽  
European Central ◽  
The Core ◽  
The Imf

By April 2010, Greece was teetering on the brink of bankruptcy. The largest sovereign default in history now loomed as early as May 19, when a massive €8.9 billion bond payment was due. Since Greece's principal lenders were a handful of systemically important French and German banks, each “dangerously overexposed to peripheral countries,” the prospect of a Greek payment suspension and subsequent contagion across the periphery unleashing a crippling continental banking crisis looked particularly unattractive to the French and German governments. This chapter shows how the high concentration of Greece's debt among a number of big banks in the core countries eventually moved the creditor states and the European Central Bank to join forces with the IMF and intervene aggressively on foreign bondholders' behalf, disbursing a series of record-breaking international bailout loans under strict policy conditionality to keep Greece solvent and servicing its external debts.

scholarly journals The ‘Haircut’ of Public Creditors under EU Law

2016 ◽  
Vol 12 (2) ◽  
pp. 223-239 ◽  
Author(s):  
Armin Steinbach
Keyword(s):  
Central Bank ◽  
European Central Bank ◽  
Debt Crisis ◽  
Eu Law ◽  
Debt Restructuring ◽  
Active Involvement ◽  
European Central ◽  
State Financing ◽  
The Eu

Haircut of public creditors as next step in the escalation of the euro debt crisis? – Exploring the boundaries set by the EU Treaty on debt restructuring – Limitations imposed by no-bailout clause and prohibition of monetary state financing – Standards set inPringleandGauweiler– Haircut on nominal debt infringes no-bailout clause – Active involvement by European Central Bank violates ban on monetary state financing – Other forms of ‘soft haircuts’ may be compatible with EU law

The European Central Bank

2020 ◽  
Author(s):  
Michael Ioannidis
Keyword(s):  
Central Bank ◽  
Sovereign Debt ◽  
European Central Bank ◽  
Debt Crisis ◽  
Central Banking ◽  
Defining Moment ◽  
European Central ◽  
Economic Constitution ◽  
Rules And Principles ◽  
History Of

The European Central Bank (ECB) is the only central bank governed by supranational constitutional law. As such, it is not only the most important institution of the Economic and Monetary Union (EMU), but it also marks a new stage in the history of central banking in general. Historically, the tasks and functions of the ECB have reflected the different stages of development of the EMU. The basic principles governing its function were set out in Maastricht, reflecting the interests and ideas about Europe’s economic constitution prevailing at that time. The sovereign debt crisis that hit Europe in 2010 was the second defining moment for the ECB after Maastricht. It posited the ECB–like the rest of the EMU–to challenges that some of the drafters of the Maastricht Treaty had not fully anticipated. These new challenges led to the adoption of novel instruments and the further clarification of fundamental rules and principles. Most important of these developments was the entrustment of the ECB with a new task, banking supervision, and the adoption of unconventional measures, which proved necessary to fulfil its monetary-policy mandate. Ultimately, not only did the ECB withstand the crisis but it emerged as a protagonist in securing the unity and integrity of the EMU.

The Independence of the European Central Bank

2019 ◽  
Vol 52 (1) ◽  
pp. 35-68
Author(s):  
Ulrike Neyer
Keyword(s):  
Public Sector ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Jel Classification ◽  
Democratic Deficit ◽  
Sovereign Debt Crisis ◽  
Single Supervisory Mechanism ◽  
The Public ◽  
European Central ◽  
New Instruments

Abstract The ECB is formally independent of instructions from any government. During and after the financial crisis and the acute sovereign debt crisis in the euro area, the ECB has used new instruments and has taken on new tasks and responsibilities. This has led to discussions about the independence of the ECB. Against this background, this paper discusses two questions. First, do the new instruments and tasks imply that the independence of the ECB is under threat? Second, is the use of the instruments and the taking on of the new tasks and responsibilities by an independent institution justified in a democracy or is there a relevant democratic deficit? With respect to these two questions the result of this paper is that especially the Public Sector Purchase Programme (PSPP) and the Single Supervisory Mechanism (SSM) have to be judged critically. Zusammenfassung Die EZB ist formal unabhängig von Weisungen der Regierungen. Während und nach der Finanzkrise und der akuten Staatsschuldenkrise im Euroraum hat die EZB neue Instrumente eingesetzt und neue Aufgaben und Verantwortlichkeiten übernommen, die zu Diskussionen über die Unabhängigkeit der EZB geführt haben. Vor diesem Hintergrund diskutiert diese Arbeit zwei Fragen. Erstens, stellen die neuen Instrumente und Aufgaben der EZB eine Gefahr für ihre Unabhängigkeit dar? Zweitens, ist der Einsatz der neuen Instrumente und die Übernahme der neuen Aufgaben von einer unabhängigen Institu­tion in einer Demokratie zu rechtfertigen, oder besteht ein relevantes Demokratiedefizit? Bezüglich dieser beiden Fragen kommt die Arbeit zu dem Ergebnis, dass insbesondere das Programm zum Ankauf von Anleihen des öffentlichen Sektors (Public Sector Purchase Programme, PSPP) und die von der EZB übernommene Bankenaufsicht (Single Supervisory Mechanism, SSM) kritisch zu beurteilen sind. JEL Classification: E42; E52; E58

(No) Haircut for Hellas?

2016 ◽  
Vol 12 (03) ◽  
pp. 520-537
Author(s):  
Alexander Thiele
Keyword(s):  
Central Bank ◽  
Public Debt ◽  
European Central Bank ◽  
Debt Crisis ◽  
Public Institutions ◽  
Debt Ratio ◽  
Member States ◽  
European Central ◽  
Budgetary Policy ◽  
Political Question

Smouldering European debt crisis: overall public debt ratio as problem – Haircut as possible solution – Greece’s current creditors: public institutions (Member States and European Central Bank) – Insuring a sound budgetary policy as main goal of Article 125 TFEU – Consequences for a haircut by the Member States – The mandate of the European Central Bank and the prohibition of direct purchases of Member State bonds – Consequences for a haircut by the European Central Bank – Haircut as political question open for democratic debate

scholarly journals The Taylor Rule and Financial Stability – A Literature Review with Application for the Eurozone

2014 ◽  
Vol 65 (2) ◽  
Author(s):  
Benjamin Käfer
Keyword(s):  
Interest Rates ◽  
Financial Stability ◽  
European Central Bank ◽  
Taylor Rule ◽  
Central Banks ◽  
Taylor Rules ◽  
European Central ◽  
The Core ◽  
High Degree ◽  
Degree Of Heterogeneity

AbstractThe question whether central banks should bear responsibility for financial stability remains unanswered. In connection with the use of interest rates, it is therefore not clear whether and how the Taylor rule should be augmented by an additional financial stability term. This paper reviews the normative and positive literature on Taylor rules augmented with exchange rates, asset prices, credit, and spreads. These measures have evolved as common indicators of financial (in)stability in the Taylor rule literature. In addition, our own analysis describes the development of these indicators for the core and the periphery of the Eurozone. Given the high degree of heterogeneity between euro area countries, the conclusion here is that an interest rate reaction to instability by the European Central Bank would be inappropriate in times of crisis. However, this conclusion is somewhat weakened if there is no crisis.

scholarly journals The Euro And The European Debt Crisis

2013 ◽  
Vol 13 (1) ◽  
pp. 103
Author(s):  
Douglas Castleberry ◽  
Balasundram Maniam ◽  
Geetha Subramaniam
Keyword(s):  
Financial Crisis ◽  
Monetary Union ◽  
European Monetary Union ◽  
European Central Bank ◽  
Debt Crisis ◽  
Domino Effect ◽  
European Monetary ◽  
European Central ◽  
History Of ◽  
Set Up

This paper studies the history of the Euro leading up to its inception, what happened after the Euro was introduced into circulation and implications for its future. The Euro was set up to accommodate a unified currency while preserving sovereignty among nations who, less than a century ago, were mortal enemies. Preserving sovereignty weakened the ability to respond to crisis by design, and it wasnt long before the limits of the European Monetary Union were tested after a series of financial crisis threatened the very existence of the Euro. The Euro held together, yet the inability of the European Central Bank to assist member nations control subsequent debt following the financial crisis may wound the ability of the Euro to replace the dollar as the dominant world currency or even prove fatal. Greece is on the verge of collapse, and is so entangled with other Euro nations; a systemic domino effect will occur should any of the troubled member Eurozone nations collapse uncontrollably. Three options remain for the European Monetary Union, banding together and preserving the currency, grossly indebted countries exiting to preserve the health of countries which are more fiscally responsible, or the Euro may land inconsequentially between success and failure, never challenging the power of the dollar as the dominant world currency.

The Logic of the Euro, Its Institutional Architecture and the Related Implications

2017 ◽  
Vol 2 (2) ◽  
Author(s):  
Paolo Savona
Keyword(s):  
Exchange Rates ◽  
Labor Markets ◽  
European Central Bank ◽  
Central Banks ◽  
Exchange Market ◽  
Lender Of Last Resort ◽  
Political Union ◽  
European Central ◽  
Currency Area ◽  
Institutional Architecture

<p><em>The Euro is the logical consequences of the European common market according to the principle ‘one market, one money’, to avoid unfair competitionchanging internal monetary parities. Anyhow it is a necessary but insufficient condition being the institutional architecture weak. The European Central Bank cannot perform as the other main central banks: cannot act as lender of last resort or intervene on the exchange market to counteract speculation; the risks on national exchange rates has been transferred to member-countries sovereign debts withouta non-deflationary solution to reenter the excesses in theagreed ratio on GDP. The Eurozone is a non-optimal currency area without a policy Mundell’s type. The suggested solutionsby the Europeans are to reform national labor markets and public bureaucracies, and by the idealists to create a political union.</em></p>

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