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Policy Contribution

Propping up Europe?

This Policy Contribution is based on a briefing paper prepared for the European Parliament Economic and Monetary Affairs Committee’s Monetary Dialogue of 25 April 2012. The Bank of England, the Federal Reserve (Fed) and the European Central Bank (ECB) have responded to the crisis with exceptional initiatives resulting in a major increase in their balance sheets. This Policy Contribution suggests that underlying structural problems relating to banks, the macroeconomic adjustment and the euro area’s governance need to be addressed before financial stability and economic growth can return.

By: and Date: April 23, 2012 Topic: European Macroeconomics & Governance

The Bank of England, the Federal Reserve (Fed) and the European Central Bank (ECB) have responded to the crisis with exceptional initiatives resulting in a major increase in their balance sheets. After the ECB’s end-2011 launch of three-year bank refinancing (LTRO), there has been speculation that all three have de facto embarked on ‘quantitative easing’.

However, major differences remain: the Bank of England and Fed have mostly relied on large-scale purchases of government bonds, while the ECB has relied on lending to financial institutions with repurchase agreements of collateral (repos).

The LTRO has successfully mitigated funding needs and reduced interbank stress, and has had a significant impact on sovereign bond yields in southern euro-area countries, and increased southern banks’ government debt holdings, while northern banks have reduced sovereign exposure.

The LTRO has had only weak effects on funding for households and non-financial corporations; credit dynamics remain weak particularly in the southern euro area.

Underlying structural problems relating to banks, the macroeconomic adjustment and the euro area’s governance need to be addressed before financial stability and economic growth can return. Monetary policy cannot fundamentally address these problems and is made less effective by economic/institutional heterogeneity.

This Policy Contribution is based on a briefing paper prepared for the European Parliament Economic and Monetary Affairs Committee’s Monetary Dialogue of 25 April 2012.

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Blog Post

Politics, not economics, demands a strengthened international role for the euro

Not just the EU but also other countries, particularly China, need a defence against weaponisation of the dollar.

By: Alicia García-Herrero and Federico Steinberg Topic: European Macroeconomics & Governance Date: October 28, 2020
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Past Event

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POSTPONED: What will the EU's new migration policy do differently?

POSTPONED. This event has been postponed. We are hoping to be able to announce a new date soon.

Speakers: Hanne Beirens, Margaritis Schinas and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 28, 2020
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Blog Post

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European Central Bank intervention provides a buffer against the uncertainty faced by European Union economies in the face of COVID-19. For the time being, this intervention has alleviated concern about Italy's debt, but without it Italy is vulnerable to a debt crisis.

By: Andrea Consiglio and Stavros Zenios Topic: European Macroeconomics & Governance Date: October 28, 2020
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Oct
29
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Disrupted medical supply chains: symptoms, side-effects, and treatment?

How can the EU increase the resilience of value chains in the health industry?

Speakers: Koen Berden, Anabel González, Niclas Poitiers and Giuseppe Ruocco Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
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Policy Contribution

European Union recovery funds: strings attached, but not tied up in knots

Ensuring effective recovery spending is a high-stakes challenge for the European Union, with the potential for derailment because of fuzzy objectives and overloaded procedures. The EU should work with member countries to identify limited policies that will maximise the impact of EU investment, while accounting for spillovers.

By: Jean Pisani-Ferry Topic: European Macroeconomics & Governance Date: October 27, 2020
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Speakers: Stephane Boujnah, Jan Pieter Krahnen and Nicolas Véron Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
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Past Event

Past Event

Next Generation EU debt: how is it structured?

The impact of EU debt on the EU market of safe assets.

Speakers: Gert-Jan Koopman and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 22, 2020
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Working Paper

The Economic growth and income distribution implications of public spending and tax decisions

European Union countries can reduce inequality of opportunity through public spending and tax decisions. Broadly, the most effective approach includes progressive taxes and inheritance taxes, spending on education, health and public infrastructure, and better government effectiveness. Better fiscal rules and institutions also increase resilience against crises.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: October 19, 2020
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External Publication

European Parliament

New life for an old framework: redesigning the European Union's expenditure and golden fiscal rules

This briefing paper focuses on two aspects of the EU fiscal framework: whether an expenditure rule would be more reliable than a structural budget balance rule and the possible benefits and drawbacks of introducing a golden rule to exclude certain types of investment from the operational fiscal rule.

By: Zsolt Darvas and Julia Anderson Topic: European Macroeconomics & Governance, European Parliament, Testimonies Date: October 14, 2020
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Podcast

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At the eleventh hour of negotiations, what will the future of the EU-UK relationship look like?

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: October 13, 2020
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Past Event

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The Sound of Economics Live: The future of EU-UK relations (again!)


At the eleventh hour of negotiations, what will the future of the EU-UK relationship look like?

Speakers: Maria Demertzis, Giuseppe Porcaro, André Sapir and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 13, 2020
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External Publication

European Parliament

What role for the European Semester in the recovery plan?

In this paper, the author looks at the implications arising from the focus of the Recovery and Resilience Plans in the context of the European Semester.

By: Thomas Wieser Topic: European Macroeconomics & Governance, European Parliament, Testimonies Date: October 12, 2020
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