Monetary and Financial Policy in the Euro Area

An Introduction

verfasst von: Dr. Maximilian Fandl

Verlag: Springer International Publishing

Buchreihe : Springer Texts in Business and Economics

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This textbook provides a comprehensive overview of monetary policy, banking supervision and financial stability in the euro area. The author uses his professional experience in central banking to provide a thorough understanding of European economics and to explore how the monetary and financial system functions. The book takes into account the profound changes that resulted from crisis developments in recent years, such as the implementation of quantitative easing or the establishment of the Single Supervisory Mechanism (SSM). The author also invites readers to develop their thoughts on alternative policies to shape the monetary and financial system of the future. The textbook is tailor-made for intermediate courses in economics but will also appeal to those preparing a career in central banking or financial regulation.

Inhaltsverzeichnis

Frontmatter

1. The Monetary and Financial System

Abstract

This chapter explains the functioning of the monetary and financial system in the euro area. As such, it establishes the basis for the discussion of monetary policy, banking supervision, and financial stability in the following chapters. The overview is deliberately brief and leaves technical details aside, while using everyday life examples to facilitate the understanding of otherwise rather generic concepts. The section first discusses the main elements and functioning of the monetary system, including the three types of money in the euro area. Afterwards, we sketch out the structure of the financial system and its three main components: financial institutions, markets, and infrastructure.

Maximilian Fandl

2. Monetary Policy

Abstract

Monetary policy is a shared responsibility by the ECB and national central banks in the euro area. This chapter explains how it is conducted in practice and how it affects the financial system as well as the broader economy. The chapter is structured as follows: First, we discuss the objectives that are pursued by monetary policy and the institutions that are involved. Second, we investigate which policy instruments are used, including both standard and nonstandard measures. Lastly, we put euro area monetary policy in a global context and discuss the responsibility of central banks for foreign exchange policy vis-à-vis non-euro area countries in Europe and other parts of the world.

Maximilian Fandl

3. The Financial Crisis in the Euro Area

Abstract

Before entering into the discussion of banking supervision and financial stability, this chapter takes a step back and looks at the financial crisis in Europe since 2007. Recalling the main phases and policy responses during the crisis may help to understand the current state of euro area banks and the associated policy challenges. It is also useful to reflect on the precrisis period during which the euro area banking sector grew significantly in size and riskiness. While some reasons that led to the financial crisis were clearly outside the scope of bank supervisors, the crisis also revealed vulnerabilities of banks that were not sufficiently addressed by supervisory authorities in the early 2000s. The vulnerabilities became clearly apparent during the crisis, at a significant cost to euro area economies and public finances.

Maximilian Fandl

4. Banking Supervision

Abstract

Banking supervision is a shared responsibility of the ECB and national supervisory authorities in the euro area. This chapter explains how supervision is conducted within the single supervisory mechanism (SSM), which started its operations in November 2014. The first section puts the establishment of the SSM in the context of the crisis since 2007. The second section lays out the institutional setting, responsibilities, and decision-making process of the SSM. The third section provides an overview of the supervisory policy process, the main policy instruments, and their enforcement. The last section focuses on the international dimension of banking supervision, with a focus on supervisory cooperation with non-SSM countries.

Maximilian Fandl

5. Financial Stability

Abstract

Financial stability is a shared objective of the ECB, national central banks, national authorities, and other institutions in the euro area. This chapter explains the activities that are pursued to safeguard the stability of the financial system. The first section defines systemic risk and explores how it can be measured. The second section discusses the policy process and instruments available with a focus on macroprudential measures, financial safety nets, and crisis management. The third section puts the policy area in an international context.

Maximilian Fandl

6. Policy Interaction

Abstract

The three policy functions of monetary policy, banking supervision, and financial stability are interrelated in many ways. This chapter focuses on the intended and unintended policy interaction in the implementation of monetary and financial policy in the euro area. The first section summarizes the main characteristics of the three policy functions, based on the discussion in previous chapters. The second section analyzes their interaction, coordination, and frictions. It also provides case studies to illustrate the challenges of policy coordination in action.

Maximilian Fandl

Backmatter

Titel: Monetary and Financial Policy in the Euro Area
verfasst von: Dr. Maximilian Fandl
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-72643-4
Print ISBN: 978-3-319-72642-7
DOI: https://doi.org/10.1007/978-3-319-72643-4