Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146973
Authors: 
Bibow, Jörg
Year of Publication: 
2015
Series/Report no.: 
Working Paper, Levy Economics Institute 845
Abstract: 
This study assesses the European Central Bank's (ECB) crisis management performance and potential for crisis resolution. The study investigates the institutional and functional constraints that delineate the ECB's scope for policy action under crisis conditions, and how the bank has actually used its leeway since 2007-or might do so in the future. The study finds that the ECB may well stand out positively when compared to other important euro-area or national authorities involved in managing the euro crisis, but that in general the bank did "too little, too late" to prevent the euro area from slipping into recession and protracted stagnation. The study also finds that expectations regarding the ECB's latest policy initiatives may be excessively optimistic, and that proposals featuring the central bank as the euro's savior through even more radical employment of its balance sheet are misplaced hopes. Ultimately, the euro's travails can only be ended and the euro crisis resolved by shifting the emphasis toward fiscal policy; specifically, by partnering the ECB with a "Euro Treasury" that would serve as a vehicle for the central funding of public investment through the issuance of common Euro Treasury debt securities.
Subjects: 
Monetary Policy
Currency Union
ECB
Lender of Last Resort
Euro Crisis
Banking Union
JEL: 
E42
E44
E52
E58
E61
Document Type: 
Working Paper

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