The European Central Bank needs a new tool to prevent the current rise in spreads, triggered by monetary policy tightening, from escalating into a new euro-area crisis.
The ECB should design a specific tool that will accompany interest rate hikes to neutralise the risk of fragmentation directly for countries facing it, staying within the bounds of the EU treaties and ensuring political legitimacy. We also advocate structural changes to the ECB’s collateral framework to avoid unnecessary uncertainty surrounding the safe asset status of European sovereign bonds.
Even though inflation in the euro area is lower than in the US, three issues make it a lot more difficult for the ECB to control inflation and preserve financial stability. Once again, the limits of EMU architecture are visible and will require a rethink.
What are the implications of prolonged inflation?
ECB Executive Board Member Philip Lane discusses the outlook for Euro area economies.
How to address vulnerabilities in banks in the coming years?
The events that have unfolded since 24 February have solved one dispute: inflation is no longer temporary.
Introducing average over time without defining what this means is counterproductive and current levels of inflation in the US will sooner or later expose this weakness in the Fed’s new strategy.
Review of 'Monetary policy in times of crisis: a tale of two decades of the European Central Bank' published in the Central Banking.
Presentation of the Yearbook of the Euro 2022.
An overview of economic policy and beyond in 2021.
A selection of charts from Bruegel’s weekly newsletter, analysis of the year and what it meant for the economy in Europe and the world.