Which macroeconomic policy response is the best option to deal with the crisis currently unfolding and will ensure that the recovery will be as quick as possible?
In responding to the global financial crisis, the ECB has pushed its monetary policy into unchartered territories . Today, it appears increasingly constrained by persistently low interest rates. This paper seeks to understand this challenge and assess whether its toolkit would allow the ECB to weather a European recession.
It is time for the EU Council to make quick progress on the fiscal front and announce something as soon as possible to show that it taken full measure of the severity of the situation.
At this online event we will record an episode of the Sound of Economics, Bruegel's podcast series. In this episode, we discuss the implications of the coronavirus crisis on financial stability and credit availability.
Coronavirus means many European Union countries will soon face major increases in their sovereign debt burdens, exacerbated by the sudden collapse of economic activity. What should the European Union do to address these debt problems?
Spreads are rising again in the euro-area at the worst possible time, when fiscal policy is needed to fight the coronavirus pandemic and the related economic shock. This blog post reviews the main options available to European policymakers, their feasibility and potential effectiveness to deal with this issue.
Lagarde needs a different bazooka in responding to a natural disaster like COVID-19.
The ECB is looking to evaluate whether its definition of price stability is effective in helping anchor inflation expectations. We argue that the current definition does not make for a very good focal point. To become a focal point the ECB needs to do two things. Price stability should be defined as inflation at 2 percent,. Remove therefore the unnecessary ambiguity of "below but close to 2 percent". But that is not enough. Around that 2 percent, the ECB should say which levels of inflation it is prepared to tolerate. There need to be explicit bands defined around that 2 percent to provide a framework for economic agents to evaluate Central Bank performance. And as the ECB will have to operate under high levels fo uncertainty these bands need to be wider than tolerance of inflation between 1 and 3 percent, which is what many inflation targeting Central Banks have tolerated over the years.
The European Central Bank’s November 2019 Financial Stability Review highlighted the risks to growth in an environment of global uncertainty. On the whole, the ECB report is comprehensive and covers the main risks to euro-area financial stability, we highlight issues that deserve more attention.
The EU urgently needs to conduct joint preparedness exercises and create uniform information and disclosure requirements that help build a true pan-European insurance market for cyber risks
The Libra Association claims it will be analogous to a currency board regime, but they have overlooked the problems of monetary management that come with it
While the euro is now a leading global currency and the European Central Bank has become a comprehensive banking supervisor, Europe’s markets have been treading water.