Weitere Kapitel dieses Buchs durch Wischen aufrufen
Global Financial Crisis of 2008–2009 which is declared as once in a century crisis by the IMF still has its scars on the global economic and financial systems. A crisis that will never be forgotten was the first test for the young ECB, it was also the tip of the iceberg that hit the Eurozone Titanic in the form of the European Sovereign Debt Crisis later on! In specific to the European Union, there are two aspects and contexts in which we shall see the Global Financial Crisis, and which shall be of our prime interest (a) how the Europeans responded to the crisis and (b) what impact the crises had on the European integration.
Bitte loggen Sie sich ein, um Zugang zu diesem Inhalt zu erhalten
Sie möchten Zugang zu diesem Inhalt erhalten? Dann informieren Sie sich jetzt über unsere Produkte:
For details on Key ECB interest rates visit https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html.
See for details on framework visit https://www.ecb.europa.eu/paym/coll/html/index.en.html.
All Governing Council decisions on refinancing operations are documented in the “General documentation on Euro-system monetary policy instruments and procedures”. Specifically, Chapter No. 6 entails the details on criteria used to determine the eligibility of assets accepted as collateral. An asset must be a fixed income debt security, for instance, a debt or a security representative of a debt or an Asset Backed Security (ABS), In order to be eligible as a collateral in monetary policy operations. It must also be denominated in euros and meet a minimum quality requirement corresponding to a maximum probability of default of 0.4% within the meaning of the Basel rules. Debt issued by the non-euro zone resident is unacceptable for posting as collateral. These requirements can be temporarily condoned/exempted by the authority of Governing Council. visit https://www.ecb.europa.eu/ecb/legal/pdf/02011o0014-20130103-en.pdf for details.
See Barthélemy et al. (2018) also see Tamura and Tabakis (2013) for details on the use of Credit Claims as collateral for Euro-system credit operations.
Buiter and Sibert (2005).
See Eberl and Weber (2014) for details on ECB Collateral Criteria: A Narrative Database 2001–2013.
Chapter 7: Walter Bagehot on the Lender of Last Resort: Nothing, therefore, can be more certain than that the Bank of England has in this respect no peculiar privilege; that it is simply in the position of a Bank keeping the Banking reserve of the country; that it must in time of panic do what all other similar banks must do; that in time of panic it must advance freely and vigorously to the public out of the reserve. And with the Bank of England, as with other Banks in the same case, these advances, if they are to be made at all, should be made so as if possible, to obtain the object for which they are made. The end is to stay the panic; and the advances should, if possible, stay the panic. And for this purpose, there are two rules: First. That these loans should only be made at a very high rate of interest. This will operate as a heavy fine on unreasonable timidity and will prevent the greatest number of applications by persons who do not require it. The rate should be raised early in the panic, so that the fine may be paid early; that no one may borrow out of idle precaution without paying well for it; that the Banking reserve may be protected as far as possible. Secondly. That at this rate these advances should be made on all good banking securities, and as largely as the public ask for them. The reason is plain. The object is to stay alarm, and nothing therefore should be done to cause alarm. But the way to cause alarm is to refuse someone who has good security to offer. The news of this will spread in an instant through all the money market at a moment of terror; no one can say exactly who carries it, but in half an hour it will be carried on all sides and will intensify the terror everywhere. No advances indeed need be made by which the Bank will ultimately lose. The amount of bad business in commercial countries is an infinitesimally small fraction of the whole business. That in a panic the bank, or banks, holding the ultimate reserve should refuse bad bills or bad securities will not make the panic really worse; the “unsound” people are a feeble minority, and they are afraid even to look frightened for fear their unsoundness may be detected. The great majority, the majority to be protected, are the “sound” people, the people who have good security to offer. If it is known that the Bank of England is freely advancing on what in ordinary times is reckoned a good security—on what is then commonly pledged and easily convertible—the alarm of the solvent merchants and bankers will be stayed. But if securities, really good and usually convertible, are refused by the Bank, the alarm will not abate, the other loans made will fail in obtaining their end, and the panic will become worse and worse. For Walter Bagehot on the Lender of Last Resort visit https://www.bradford-delong.com/2011/03/walter-bagehot-on-the-lender-of-last-resort.html?asset_id=6a00e551f0800388340147e3963795970b.
The Governing Council of the European Central Bank (ECB) first approved for seven and then for the nine National Central Banks (NCBs) that have put forward relevant proposals, specific national eligibility criteria and risk control measures for the temporary acceptance of additional credit claims as collateral in Euro system credit operations. These NCBs included the Central Bank of Ireland, the Bank of Greece, the Banco de España, the Banque de France, the Banca d'Italia, the Central Bank of Cyprus, the Oesterreichische Nationalbank, the Banco de Portugal and Banka Slovenije. For Non-marketable assets Eligibility criteria visit, https://www.ecb.europa.eu/mopo/assets/standards/nonmarketable/html/index.en.html.
For details on Agreement on Emergency Liquidity Assistance (ELA) visit https://www.ecb.europa.eu/pub/pdf/other/Agreement_on_emergency_liquidity_assistance_20170517.en.pdf?23bb6a68e85e0715839088d0a23011db.
Mésonnier et al. (2017) provided empirical evidence, though they were only drawing on French dataset.
For “Bundesbank receives final payment from German Lehman insolvency proceedings” visit https://www.bundesbank.de/en/press/press-releases/bundesbank-receives-final-payment-from-german-lehman-insolvency-proceedings-666694.
For “ECB announces measures to support bank lending and money market activity” visit https://www.ecb.europa.eu/press/pr/date/2011/html/pr111208_1.en.html.
For Verbatim of the remarks made by Mario Draghi visit https://www.ecb.europa.eu/press/key/date/2012/html/sp120726.en.html.
Epstein (1992) introduced a Marx-Keynes-Kalecki model of the political economy of comparative central banking in which he had suggested that monetary policy is determined by four key factors: capital–labour relations; industry–finance relations; the degree of central bank independence; and the position of the economy in the world economy. He argued that there exists a relationship between political-economic structure and central bank policy. I think one can’t agree more on the political-economic nexus of monetary policy, not only in USA and UK but also in ECB where the central bank shall be “supposedly” independent of political pressure.
For Keynote address “The ECB’s enhanced credit support” by Jean-Claude Trichet, President of the ECB at the University of Munich, 13 July 2009 visit https://www.ecb.europa.eu/press/key/date/2009/html/sp090713.en.html.
For “Tiberius Used Quantitative Easing To Solve The Financial Crisis Of 33 AD” visit https://www.businessinsider.com/qe-in-the-financial-crisis-of-33-ad-2013-10?r=US&IR=T.
The effectiveness of Q.E is also debateable and interestingly in the study “Fifty Shades of QE” Fabo et al. (2021) reported a divergence between the findings of central bank researchers and academic economists regarding the macroeconomic effects of quantitative easing (QE). They found that the report by centrals suggests a more favourable outcome of Q.Es in terms of enhancing economic growth.
For details on “Tender Procedure for the Provision of US Dollar to Euro-system Counterparties” visit https://www.ecb.europa.eu/mopo/implement/omo/pdf/EUR-USD_tender_procedure.pdf?1e47c84c4ac17c543f58acb3e0e4dcd7.
For details on “Decision of the European Central Bank of 29 July 2014 on measures relating to targeted longer-term refinancing operations”, visit https://www.ecb.europa.eu/ecb/legal/pdf/oj_jol_2014_258_r_0006_en_txt.pdf.
For details on ECB’s measures to address severe tensions in financial markets, visit https://www.ecb.europa.eu/press/pr/date/2010/html/pr100510.en.html.
The distributions are by nominal values as at end of Q1 2021. The numbers may not sum to 100% due to rounding. The benchmark is constructed using the universe of eligible securities pertaining at the end of Q1 2021. The weights of certain covered bond classes have been adjusted lower to reflect their lack of availability and illiquidity. The CBPP3 benchmark has evolved over time leading to some deviations between the country and credit rating distribution of CBPP3 holdings and the distribution of the quarterly CBPP3 benchmark (for further information please see Box 2 entitled “Providing additional transparency on aggregate APP holdings”, Economic Bulletin, Issue 2, ECB, 2019, pp. 79–81). Only bonds with an asset rating are included in the data for the credit rating distribution. The ratings are first-best asset ratings.
See Jean Pisani-Ferry, Guntram Wolff (2012) as they formulated following five categories: Lending to financial institutions, mainly through repos; Government securities held within the framework of Asset Purchase Programmes; Non-government securities held within the framework of Asset Purchase Programmes; Foreign-exchange swaps with other central banks (for the Fed)/foreign currency lending to domestic institutions (for the Bank of England and the ECB). Other assets.
See Gerdesmeier et al. (2007).
See Sardoni and Wray (2006).
For “Is LTRO QE in disguise?” visit https://voxeu.org/article/ltro-quantitative-easing-disguise.
On the comparative central banking, Ferreira (2015) compared the response of US Fed and ECB and argued that “the Fed was more effective and prompter in taking action against the crisis. In addition, the Fed was also more successful in its communications, with a better management of expectations, capacity to adapt to the markets’ response to quantitative easing and faster implementation of forward-looking guidance, a feature determinant to the success of monetary policy”. Similarly, On the comparison between Fed and ECB to the Great Recession, Kang et al. (2016) also argued that US approach was much more proactive and aggressive. Furthermore, that the ECB failed to provide intime stimulus which may result in the Eurozone slipping into a low-inflation trap. With the hindsight we can see that their fears real. Similarly, in regard to the Global Financial Crisis and European Sovereign Debt Crisis, De La Dehesa (2012) argued that the monetary policy responses to the crisis by the US Fed, Bank of England and the ECB were different due to large differences in institutional set-up, structural differences in the financial markets and other economic differences. He argued that underlying differences among them also influenced the use of the non-conventional or non-standard monetary policy measures. While Pronobis (2014) also argued that the ECB response to GFC was more cautious comparing to Fed, BoE or BoJ and the reason was constant disagreement among European politicians, defragmentation of European sovereign debt market and different pattern of financing in Europe (more bank-oriented and less market-based—unlike in US or UK). For further insight, one may see Agostini et al. (201) comparative study of central banks Quantitative Easing Programs by ECB, Bank of Japan, US Fed and Bank of England in which they drew on a number of existing studies.
For Implementation aspects of the public sector purchase programme (PSPP) and list of agencies see https://www.ecb.europa.eu/mopo/implement/omt/html/pspp.en.html.
For “How ECB purchases of corporate bonds helped reduce firms’ borrowing costs” visit https://www.ecb.europa.eu//pub/economic-research/resbull/2020/html/ecb.rb200128~00e0298211.en.pdf.
The is different to the Pure qualitative forward guidance which has no explicit end-date or numerical thresholds that provide information about the likely evolution of policy interest rates in the future and no explicit reference to a configuration of underlying conditions, including regarding the objectives of policy, which would justify this evolution. Other forms can be Calendar-based forward guidance which can entail making a conditional commitment based on the explicit date after which the stance of monetary policy is expected to change and/or Outcome-based forward guidance with explicit numerical conditions or thresholds that link central bank actions to a selected set of observed or projected economic variables.
See Coenen et al. (2017) for Communication of monetary policy in unconventional times.
- Global Financial Crisis—Tip of the Iceberg
Muhammad Ali Nasir
- Chapter 3
Pluta Logo/© Pluta, Rombach Rechtsanwälte/© Rombach Rechtsanwälte