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>

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>

The ECB as Lender of Last Resort in the Eurozone? An analysis of an optimal institutional design of Emergency Liquidity Assistance competence within the context of the Banking Union

2019 ◽  
Vol 26 (5) ◽  
pp. 628-668
Author(s):  
Sara Elisa Dietz
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
European Central Bank ◽  
Institutional Design ◽  
The United States ◽  
Central Banks ◽  
Banking Union ◽  
The European Union ◽  
Lender Of Last Resort ◽  
European Central

The latest financial crises in Europe and the United States have reminded us of the importance of the role of central banks as Lender of Last Resort. This article examines the current legal framework in the European Union with regard to the allocation of Lender of Last Resort competence, which until now has been exercised by the national central banks in the Eurozone. The new Emergency Liquidity Assistance Agreement 2017 sustains this institutional design, leaves the Emergency Liquidity Assistance competence with the national central banks and specifies the cooperation between the European Central Bank and the national central banks with regard to the veto-option of the European Central Bank to national Emergency Liquidity Assistance operations. Against this background, the paper discusses whether the current legal competence structure of the European and Monetary Union would also allow for more authority of the European Central Bank with regard to Emergency Liquidity Assistance powers. The paper concludes there is a sufficient legal basis in the monetary policy and financial stability mandate of the European Central Bank to allow it to grant Emergency Liquidity Assistance at least with regard to ‘significant’ banks, as defined under the current European Banking Supervision regime.

scholarly journals Unconventional monetary policy of the European Central Bank: A brief recapitulation

2019 ◽  
Vol 53 (3) ◽  
pp. 43
Author(s):  
Ilona Skibińska-Fabrowska
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Central Bank ◽  
Economic Crisis ◽  
Financial Market ◽  
European Central Bank ◽  
Central Banks ◽  
Unconventional Monetary Policy ◽  
European Central ◽  
National Bank

<p>The financial and economic crisis that has hit many economies in recent years has significantly increased the activity of central banks. After using the standard instruments of conducting monetary policy, in view of the obstruction of monetary impulse transmission channels, they reached for non-standard instruments. Among them, asset purchase programs played a signifciant role. The European Central Bank (ECB) launched the largest asset purchase programme (APP) of this type in 2014 and expired in December 2018. The aim of the undertaken activities was to improve the situation on the financial market and stimulate economic growth. The article reviews the literature and results of research on the effects of the program and indicates the possibility of using the ECB’s experience in conducting monetary policy by the National Bank of Poland.</p>

scholarly journals Comparison of the Approach of the Czech National Bank and the European Central Bank to the Effects of the Global Financial Crisis

2021 ◽  
Vol 10 (2) ◽  
pp. 18-46
Author(s):  
Andrea Cecrdlova
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Financial Crisis ◽  
Central Bank ◽  
European Central Bank ◽  
Global Financial Crisis ◽  
Central Banks ◽  
European Central ◽  
National Bank ◽  
The Global Financial Crisis

The latest global crisis, which fully erupted in 2008, can have a significant impact on central banks credibility in the long run. During the last crisis, monetary authorities encountered zero interest rate levels and, as a result, started to use non-standard monetary policy instruments. The Czech National Bank decided to use a less standard instrument in November 2013, when it started to intervene on the foreign exchange market in order to keep the Czech currency at level 27 CZK / EUR. However, the European Central Bank also adopted a non-standard instrument, when chose a path of quantitative easing in 2015 in order to support the euro area economy by purchasing financial assets. The question remains whether the approach of Czech National Bank or the approach of European Central Bank in the crisis and post-crisis period was a more appropriate alternative. With the passage of time from the global financial crisis, it is already possible to compare the approaches of these two central banks and at least partially assess what approach was more appropriate under the given conditions. When comparing the central banks approaches to the crisis, the Czech National Bank was better, both in terms of the rate of interest rate cuts and the resulting inflation with regard to the choice of a non-standard monetary policy instrument. The recent financial crisis has revealed the application of moral hazard in practice, both on behalf of the European Central Bank and the Czech National Bank, which may have a significant impact on their credibility and independence in the coming years.

scholarly journals International legal and national regulation of digital currency: the experience of China and the EU

2021 ◽  
pp. 82-86
Author(s):  
M. R. Saliya
Keyword(s):  
International Organizations ◽  
European Central Bank ◽  
Legal Regulation ◽  
Central Banks ◽  
The European Union ◽  
Bank Of China ◽  
National Regulation ◽  
European Central ◽  
Digital Currency ◽  
The Eu

The article discusses the issue of legal regulation of the digital currency of central banks. The experience of international organizations, as well as the fi rst steps in this direction from China, represented by the People’s Bank of China and the European Union, represented by the European Central Bank, are examined.

Risk culture and banking supervision

2017 ◽  
Vol 25 (2) ◽  
pp. 209-226 ◽  
Author(s):  
Alessandro Carretta ◽  
Vincenzo Farina ◽  
Paola Schwizer
Keyword(s):  
Cultural Differences ◽  
European Central Bank ◽  
Design Methodology ◽  
Central Banks ◽  
Banking Union ◽  
Banking Supervision ◽  
Text Data ◽  
Content Type ◽  
European Central ◽  
Risk Culture

Purpose This paper aims to analyzing the main risk culture traits of a sample of Central Banks and Supervisory Authorities in Europe as well as of the European Central Bank (ECB). Design/methodology/approach Risk culture is measured through text data processing of the official discourses made by the head Supervisory Authorities, during the years from 1999 to 2012. Findings Results highlight heterogeneous but converging risk cultures for European Union (EU) supervisors and the presence of a “distance” between these cultures and the risk culture of the ECB. Originality/value The paper points out that cultural differences, especially in presence of credit markets still characterized by poor integration, could create unwanted distortion effects during the initial stages of the Banking Union.

scholarly journals Análisis de la integración y dependencia de las políticas monetarias de la Unión Europea

2013 ◽  
pp. 47
Author(s):  
María del Carmen González Velasco ◽  
Roque Brinckmann
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Empirical Evidence ◽  
European Central Bank ◽  
Central Banks ◽  
Uncovered Interest Parity ◽  
European Central ◽  
Long Run ◽  
Bank Of England ◽  
Interest Parity

En este artículo se efectúa un análisis de la integración y dependencia de las políticas monetarias de la Unión Europea y, en concreto, de las políticas monetarias de la Unión Económica yMonetaria y de la zona no euro para el periodo comprendido entre Enero de 1999 y Septiembre 2009. Se aplica la metodología de la cointegración de Engle y Granger (1987) y de Johansen(1988) para contrastar la hipótesis de la paridad de tipos de interés no cubierta y se llega a la conclusión de que ambas políticas están cointegradas porque mantienen una relación de equilibrio a largo plazo. También se deduce una dependencia de la política del Banco de Inglaterra de la política del Banco Central Europeo, lo que confirma la importancia y el liderazgo de la Unión Económica y Monetaria.<br /><br />This study is to investigate the long-run relationship and dependence between the UME´s monetary policy and non-euro zone´s monetary policy for the period from January 4, 1999 to September 30, 2009. We use cointegration methodology to test the Uncovered Interest Parity Hypothesis and the results indicate a long-run cointegration and empirical evidence testifies a leader-follower pattern between the two central banks. According to this pattern, the Bank of England does follow the European Central Bank.

The European Central Bank

2018 ◽  
Author(s):  
Chiara Zilioli ◽  
Phoebus Athanassiou
Keyword(s):  
European Union ◽  
Central Bank ◽  
Monetary Union ◽  
European Central Bank ◽  
Central Banks ◽  
The European Union ◽  
European Central ◽  
European System ◽  
The Eu

The provisions on Monetary Union (MU), of the Treaty on the functioning of the European Union (TFEU or the Treaty), as well as the Statute of the European System of Central Banks and of the European Central Bank (the Statute), are important in their own right, and are amongst those from which any student of the European Union (EU) can learn a great deal with regard to the EU.

scholarly journals Ready to Do Whatever it Takes? The Legal Mandate of the European Central Bank and the Economic Crisis

2013 ◽  
Vol 15 ◽  
pp. 503-536 ◽  
Author(s):  
Daniel Wilsher
Keyword(s):  
Moral Hazard ◽  
Central Bank ◽  
Monetary Union ◽  
European Central Bank ◽  
Sovereign Default ◽  
Lender Of Last Resort ◽  
Liability Rule ◽  
Fiscal Discipline ◽  
Public Deficit ◽  
European Central

AbstractTo complement the ‘no shared liability’ rule and public deficit limits, the Maastricht Treaty gave the European Central Bank (ECB) a narrow remit to focus on price stability. Crucially, as a ‘non-sovereign’ central bank, it was unclear that the ECB would act as lender of last resort in the event of market panics. The neoliberal orthodoxy at the heart of Economic and Monetary Union (EMU) held that moral hazard and inflationary risks militated against anything resembling ‘illegal monetary financing’. Following monetary union, markets under-priced risks and encouraged bubbles, but, with the onset of the crisis, sentiment overshot the other way, starving credit from banks and later sovereigns. With bailout funds limited and austerity failing to improve debt spreads, sovereigns became illiquid. ECB officials reluctantly concluded that an uncontrolled sovereign default would threaten the continuation of monetary union. The ECB was thus forced de facto to expand its mandate, first to help banks and, later, to help sovereigns facing loss of access to bond markets. Ultimately this was successful in restoring confidence, but the ECB remained uncomfortable with its role. It has continued to stress its legal limitations and has pressed for reformed governance to enforce fiscal discipline. The economic case for a lender of last resort in a crisis was always strong, but brings with it a worsening moral hazard problem that may invite leaders to avoid the deeper political changes necessary to rebalance the Eurozone.

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