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Crisis management for euro-area banks in central Europe

Alexander Lehmann, (2019), «Crisis management for euro-area banks in central Europe», Bruegel, 19 November Euro-area bank integration has decreased as post-financial crisis national rules require banks to hold more capital at home. It might be undermined further by bank resolution planning. Either a Single Resolution Board takes the lead for the entire banking group or independent local intervention schemes need to be developed for crisis resolution. Related Posts Bruegel, (2019), …Read More

2019 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR GREECE

IMF Country Report No. 19/340, (2019), «2019 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR GREECE», 15 November Greece’s economic recovery continues, but it has fallen far short of expectations. The new government elected in July has pledged to follow pro-growth policies while honoring fiscal and structural policy commitments to Euro Area (EA) member states, but its ability to overcome vested interests has yet to …Read More

The Digital Money Revolution

Huw Van Steenis, (2019), «The Digital Money Revolution», Project Syndicate , 13 November The rapid pace and sheer scale of innovation in digital currencies and mobile payments indicates that a monetary revolution is forthcoming. The choice for governments and central banks is whether to stand in front of a train that is gaining steam, or get on board and reap the benefits. Related Posts VoxEU, (2019), «A digital euro to …Read More

Scholz’s improved plan to complete the banking union

Rebecca Christie, (2019), «Scholz’s improved plan to complete the banking union», Bruegel, 14 November Olaf Scholz wrote in the Financial Times of an “undeniable” need to deepen the euro area banking union. With London on the verge of departure, the European Union will lose its biggest financial hub and come face to face with the shortcomings of its homegrown financial architecture. Related Posts Voxeu, (2019), «Potential output and EU fiscal surveillance», 23 …Read More

The impact of negative interest rates on banks and firms

Carlo Altavilla, Lorenzo Burlon, Mariassunta Giannetti, Sarah Holton, (2019), «The impact of negative interest rates on banks and firms», VoxEU, 8 November Economists and policymakers continue to question the effectiveness of monetary policy when an economy faces near-zero or sub-zero interest rates. Sceptics argue that central banks cannot stimulate lending, and may indeed decrease the loan supply, by setting negative interest rates. Related Posts Καθημερινή, (2019), «Αδιέξοδο για κεντρικές τράπεζες …Read More

A digital euro to save EMU

Thomas Mayer, (2019), «A digital euro to save EMU», VoxEU, 6 November  The desire to avoid credit and investment boom-bust cycles has led some to advocate replacing money creation through bank credit extension with direct money issuance by the central bank or a private entity, or linking money to an existing asset. Related Posts Project Syndicate, (2019), «The Monetarist Era is Over»,  31 October Voxeu, (2019), «Right here, right now: The quest …Read More

Taming the global financial cycle: Central banks and the sterilisation of capital flows in the first era of globalisation

Guillaume Bazot, Eric Monnet, Matthias Morys, «Taming the global financial cycle: Central banks and the sterilisation of capital flows in the first era of globalisation», VoxEU, 2 November Countries wish to reap the benefits of financial integration while shielding themselves from the vagaries of international financial markets. Can they have it both ways? A large body of work acknowledges the constraints of a trilemma, pointing out that a fixed-exchange rate regime …Read More

Liquidity linkages in European sovereign bond markets can amplify fundamental economic shocks

Daragh Clancy, Peter G Dunne, Pasquale Filiani, (2019), «Liquidity linkages in European sovereign bond markets can amplify fundamental economic shocks». VoxEU, 4 November Stable sovereign bond markets are crucial to a well-functioning economy and financial system. But despite the importance of amplifications of sovereign bond market tensions related to flights-to-safety and sudden liquidity contractions, there is little direct empirical evidence of the transmission channels through which such catalysts for amplification …Read More

The Monetarist Era is Over

Anatole Kaletsky, (2019), «The Monetarist Era is Over», Project Syndicate,  31 October Central bankers have been the first to recognize that the effectiveness of monetary policy in managing demand and stabilizing economic cycles has reached its limits. The problem is that many politicians and academic economists remain in denial. Related Posts Project Syndicate, (2019), «The Allure and Limits of Monetized Fiscal Deficits» 28 October Voxeu, (2019), «Right here, right now: The quest …Read More

Draghi leaves Lagarde to heal rift at European Central Bank

Balazs Koranyi, Francesco Canepa, (2019), «Draghi leaves Lagarde to heal rift at European Central Bank», Reuters, 29 October Mario Draghi will leave a more united euro zone when he steps down as president of the European Central Bank this week, but he hands over a body more publicly divided than ever on how best to resurrect an ailing regional economy. The 72-year-old Italian banker is widely credited with saving the euro zone …Read More