scholarly journals The democratic deficit and European Central Bank crisis monetary policies

2019 ◽  
Vol 26 (1) ◽  
pp. 81-93 ◽  
Author(s):  
Anna-Lena Högenauer ◽  
David Howarth
Keyword(s):  
Central Bank ◽  
Sovereign Debt ◽  
European Central Bank ◽  
Policy Making ◽  
Debt Crisis ◽  
Democratic Legitimacy ◽  
Sovereign Debt Crisis ◽  
Monetary Policies ◽  
European Central ◽  
International Financial Crisis

This article presents the argument that European Central Bank (ECB) policy-making from the start of the sovereign debt crisis in 2010 undermined the democratic legitimacy of the ECB. We start with the argument – defended by a number of scholars including Majone and Moravcsik – that where European Union (EU) policy-making is technocratic and does not have significant redistributive implications it can benefit from depoliticization that does not undermine the democratic legitimacy of this policy-making. This is notably the case where EU institutions have narrow mandates and are constrained by super-majoritarian decision-making. Prior to the international financial crisis, the ECB’s monetary policies were shaped entirely by the interpretation that its mandate was primarily to ensure low inflation. From the outbreak of the sovereign debt crisis, the ECB adopted a range of policies which pushed its role well beyond that interpretation and engaged in a form of redistribution that directly undermined treaty provisions.

scholarly journals THE MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE PERIOD OF SOVEREIGN DEBT CRISIS

Ekonomika ◽  
2013 ◽  
Vol 92 (2) ◽  
pp. 20-31
Author(s):  
Deimantė Andriuškevičiūtė ◽  
Norbertas Balčiūnas
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Credit Risk ◽  
Sovereign Debt ◽  
European Central Bank ◽  
Debt Crisis ◽  
Balance Sheet ◽  
Sovereign Debt Crisis ◽  
Government Bonds ◽  
European Central

Abstract. The European Central Bank was forced to start using non-standard measures in order to manage the situation determined by the global financial and sovereign debt crisis, namely to sort out liquidity problems and expand credit supply. The European Central Bank is criticized for applying non-standard tools because of increase in inflation risk. However, the analysis shows that the inflation could be managed by the absorption of liquidity surplus. However, there is a negative side of using non-standard measures, such as a significant increase in the credit risk, which arises due to having government bonds in the balance sheet of the European Central Bank. In addition, this indicates that the European Central Bank indirectly finances governments.Key words: monetary policy, inflation, sovereign debt crisis, credit risk, quantitative easing

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 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.

scholarly journals The European Central Bank’s intricate independence versus accountability conundrum in the post-crisis governance framework

2019 ◽  
Vol 26 (1) ◽  
pp. 165-179 ◽  
Author(s):  
Fabian Amtenbrink
Keyword(s):  
Central Bank ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Legal Order ◽  
Democratic Legitimacy ◽  
The European Union ◽  
Governance Framework ◽  
European Central ◽  
Main Determinants ◽  
New Generation

In the wake of the European financial and sovereign debt crisis there is a revived interest in the constitutional position of the European Central Bank (ECB) in the European Union legal order, notably its independence and democratic legitimacy. A new generation of researchers, witnessing and in part affected by the course of events during the crisis, is currently discovering this field of research. These contemporary contributions are more than reiterations of debates at the time of the establishment of the European System of Central Banks. Indeed, the (legal) landscape pertaining to the position of the ECB has transformed significantly during the crisis, not only raising concerns about the legitimacy of the position and actions of the ECB, but, somewhat paradoxically, also about the compatibility of its functions and actions with the basic EU Treaty preference for an independent, inflation-averse and thus, conservative central bank. This contribution provides a broader picture of the independence-versus-accountability conundrum in the post-crisis governance framework by discussing main determinants of the independence and democratic legitimacy of the ECB today, as well as identifying risks emanating from the ECB’s position in the EU legal order. Based on this assessment areas of improvement are identified.

World Overview

2011 ◽  
Vol 218 ◽  
pp. F13-F21
Author(s):  
Dawn Holland ◽  
Aurélie Delannoy ◽  
Tatiana Fic ◽  
Ian Hurst ◽  
Iana Liadze ◽  
...  
Keyword(s):  
Sovereign Debt ◽  
European Central Bank ◽  
World Economy ◽  
Debt Crisis ◽  
Sovereign Debt Crisis ◽  
European Central ◽  
Widespread Agreement ◽  
The World ◽  
Heads Of State ◽  
Bail Out

Global economic prospects have deteriorated markedly in recent months. Risks around our central forecast have shifted distinctly to the downside. Much of this is due to the heightened uncertainty surrounding Europe's sovereign debt crisis. There is widespread agreement among policymakers - ranging from the IMF, European Commission and European Central Bank to individual heads of state both within and outside the Euro Area - that resolution to the crisis requires urgent, comprehensive and coordinated action. Yet 17 months after the first bail-out programme was introduced in Greece, policymakers have failed to deliver a strategy that promises a credible prospect of growth and an end to rising debt profiles. Solvency concerns in three relatively small peripheral countries (Greece, Ireland and Portugal), combined with weakening growth across the continent, raise the dangerous spectre of illiquidity beginning to affect solvency in the larger core economies with high debt ratios - notably Italy. Left unchecked, the consequences would be severe for the world economy.

scholarly journals Central Banks Caught Between Market Liquidity and Fiscal Disciplining: A Money View Perspective on Collateral Policy

2021 ◽  
Author(s):  
Jakob Vestergaard ◽  
◽  
Daniela Gabor ◽  
Keyword(s):  
Central Bank ◽  
Risk Taking ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
Central Banks ◽  
Crisis Response ◽  
Market Liquidity ◽  
Monetary Policies ◽  
European Central ◽  
Point Of Departure

Despite much attention to unconventional monetary policies after the financial crisis, the collateral policies of central banks are rarely discussed. And when they are, the haircuts applied to assets pledged to access central bank liquidity tend not to be analyzed. An exception to these trends is the recent work by Nyborg (2017), who argues that the collateral policies adopted by the European Central Bank (ECB) aggravated the sovereign debt crisis and put the survival of the euro at risk. Taking our point of departure in the money view literature (Mehrling 2011), we argue however that Nyborg’s critique of the ECB’s crisis response is misguided and that his proposal to deepen and reinforce the ECBs role in the fiscal disciplining of member states would be procyclical and destabilizing. Through our analysis of Nyborg’s work and the ECBs crisis response, we identify core principles for countercyclical collateral policies suitable for market-based financial systems.

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