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Studying monetary authority response to macroeconomic imbalances using the interest rate as a proxy variable for monetary policy became ineffective after the financial crisis, when central banks exhausted the effective capacity of interest rates by reaching the zero lower bound (ZLB). In an effort to analyse the unconventional response deployed by central banks, we present and estimate a modified reaction function that uses money supply as the operational instrument of monetary policy for the Federal Reserve and the European Central Bank, and we verify its utility as an explanatory instrument for the behaviour of the two monetary authorities. By applying our strategy, it is feasible to identify both monetary policy reaction with regard to the economic situation as well as other possible monetary authority concerns regarding governments' fiscal behaviour and the evolution of asset markets, regardless of the monetary policy applied at any given time. [ABSTRACT FROM AUTHOR]

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This study evaluates the impact of unconventional policy announcements by the European Central Bank (ECB) on the interconnectedness of sovereign credit default swaps (SCDS) markets in the European Union (EU) from 2009 to 2014. The findings suggest that ECB's unconventional policy measures reduced sovereign default risk not only in Eurozone nations but also in Central and Eastern European countries. To investigate the transmission of monetary policy effects across European countries, we employ the Diebold & Yilmaz connectedness framework along with an event-study approach. Our analysis reveals robust evidence of substantial positive spillovers from ECB monetary policy measures to all EU countries, effectively shielding the SCDS market from adverse shocks. Among various policy tools, we observe that asset purchase programs enhance overall connectedness, while mixed policy measures bolster within-cluster connectedness. Furthermore, our results highlight the efficacy of specific monetary policy instruments, indicating that asset purchase programs and quantitative easing are particularly effective in reducing sovereign risk. [ABSTRACT FROM AUTHOR]

Using multinomial logit methodology for financing application decisions for bank loans, credit lines and trade credits, we show that firms' financial behavior is driven by their lagged experience. Moreover, the optimism and pessimism of firms (animal spirit) is another important determinant. Our results stress the importance of the behavioral perspective to corporate finance. The policy of quantitative easing of the ECB had only weak effects on the access to banking loans, while it was significantly correlated with lower internal funding. Our results have possible implications to understand the behavioral dynamics of corporate financing structure the in the post pandemic period. [ABSTRACT FROM AUTHOR]

This article researched the effect of the unconventional monetary policy tool of quantitative easing (QE), commonly used by the world's leading central banks (Federal Reserve and European Central Bank) after the COVID-19 pandemic crisis, on financial and reel markets. The purpose of QE is to inject money into the economy with the aim of stimulating nominal spending. This effect occurs through expectations and the use of credit. The article presents experiences based on data from the Federal Reserve and European Central Bank. Data show that the QE policy applied during the COVID-19 pandemic in the USA and European region had significant effects on total demand, inflation and GDP. [ABSTRACT FROM AUTHOR]

The relationship between the environment and climate change on one hand and the financial system, financial regulation and monetary policy on the other is growing in importance. This paper examines the possible impact of the European Central Bank's monetary policy of quantitative easing on the environmental policy of the European Union. Using data from Climate Bonds Initiative, the paper analyses the variation in the amount of "green labelled bonds" issued in the individual member countries of the Eurozone areas, as a function of liquidity inducing monetary policy variables. The paper finds a positive and significant relationship between the two measures. [ABSTRACT FROM AUTHOR]

Monetary finance (money creation by central banks to fund public expenditure) is a high-profile part of economic, political and policy debates concerning the legitimacy of central banks in liberal economies and democracies. This article makes a distinctively legal contribution to those debates by analysing the legal frameworks governing monetary finance in three prominent central banking systems between 2008 and 2020: the Federal Reserve System, the Eurosystem and the Bank of England. It begins by explaining the law governing central bank and national treasury relations in the United States, the EU and the UK. It then examines how that law operated under the unconventional monetary policies adopted by central banks in response to the financial crisis and the COVID-19 pandemic. The article concludes by reflecting on the challenges monetary finance presents to the sui generis position of central banks in the liberal constitutional order. [ABSTRACT FROM AUTHOR]

This paper examines how shocks to government bond duration risk held by price‐sensitive investors affect the euro area term structure of interest rates and the wider macroeconomy. We construct a new measure of the bond "free float," which adjusts total debt for foreign official holdings and weights by residual maturity. Using a small macrofinance Bayesian Vector Autoregression (VAR) model, we estimate that the first round of asset purchases under the European Central Bank's (ECB) public sector purchase program reduced euro area 10‐year bond yields by around 30 bps in 2015. The positive impact on the output gap and inflation in 2016 was about 0.2 and 0.3 ppt, respectively. [ABSTRACT FROM AUTHOR]

We estimate the response of sovereign bond prices to net supply shocks caused by purchase operations under the ECB's Public Sector Purchase Programme (PSPP). To avoid simultaneity bias in the estimated relationship between prices and purchases, we exploit a PSPP feature that renders securities temporarily ineligible for reasons unrelated to their prices. Using these purchase restrictions as an instrument to identify exogenous variation in purchase volumes, we find that PSPP causes statistically significant and economically relevant upward price impacts. The impacts are short‐lived and concentrated in securities issued by higher yield jurisdictions and characterized by higher maturity and lower liquidity. [ABSTRACT FROM AUTHOR]

Central banks have been important yet underexplored actors in the fight against the Great Recession. In addition to ultra-low interest rates, they adopted large-scale bond-buying programmes known as quantitative easing (QE). Yet there is significant variation in QE programmes with important distributive consequences. Why has the Fed adopted multi-trillion-dollar bond-buying programmes in housing, while the ECB has not? This article argues that the Fed targeted the integrated housing finance market as a monetary transmission strategy to stimulate core elements of the US growth model: credit, demand, and consumption. In contrast, the ECB hardly stimulated housing given the eurozone's fragmented housing finance markets and the macroeconomic frictions with some eurozone growth models, particularly export-oriented Germany. Analysing archival and interview data, this article traces the decisions of these central banks since the Great Recession, contributing to scholarship on the politics of central banking, economic policy in hard times, and the welfare state. [ABSTRACT FROM AUTHOR]

Almost three and a half years since its famous Gauweiler ruling, the Court was called upon in Weiss to rule on another important preliminary reference made by the German constitutional court, concerning this time the validity of the quantitative easing programme of the European Central Bank. Weiss makes it apparent that the two courts continue to have conflicting views about the role and the extent of the mandate of the ECB, the measure and the nature of the judicial review that should be exercised upon it and the delineation between monetary and economic policy under the Treaties. At the same time, it is equally clear that the German Constitutional Court continues its attempt to prepossess the outcome of its preliminary rulings and to guide the Court towards its own interpretation of the law. However, the much more conciliatory language of the preliminary reference compared to Gauweiler and the absence of an explicit ultra vires threat in case the ruling is not given in the manner suggested by the constitutional court leaves room for optimism that the direct judicial dialogue established between these two courts will progressively lead to the normalisation of their institutional relations. [ABSTRACT FROM AUTHOR]

While the ECB helped mitigate the euro crisis in the aftermath of Lehman, it has stretched its monetary mandate and moved into fiscal territory. This text describes and summarizes the crucial role played by the ECB in the intervention spiral resulting from its bid to manage the crisis. It also outlines ongoing competitiveness problems in southern Europe, discusses the so-called austerity policy of the Troika, comments on QE and presents two alternative paths for the future development of Europe. [ABSTRACT FROM AUTHOR]

The article offers information on the policy of quantitative easing of European Central Bank (ECB). Topics discussed include legality of the ECB decision on Outright Monetary Transactions; duration and the economic effects of the Public Sector Assets Purchase Programme; and purchase of government bonds on the secondary market to prevent risk of deflation.

The key objective of the paper is to explore the unconventional (non-standard) monetary policy measures undertaken by the world's leading central banks in response to the global financial crisis. This research is focused on four leading central banks -- the European Central Bank (ECB), the Federal Reserve System (Fed) of the United States, the Bank of England (BoE) and the Bank of Japan (BoJ). Key attention is drawn on the major effects from the leading central banks' non-standard monetary policy on the developed economies -- in particular, the euro area member states, the US, the UK and Japan. With this regard, linear econometric models are constructed for assessing the impact of the accommodative monetary policy at low or negative nominal interest rates on the euro area, the US, the British and the Japanese government bond yields. The examined euro area member states are Austria, Belgium, Germany, Greece, Ireland, Spain, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, Finland and France. Only for Estonia, no econometric model is constructed due to the lack of available data. The results from the econometric modeling demonstrate the empirical evidence of the interest rate transmission channel in the surveyed developed economies. [ABSTRACT FROM AUTHOR]

Quantitative easing à la ECB has produced significant impact on long-term nominal rates through ex ante channels, such as signalling channels, term duration channels, and risk premia channels, well before it materially started. Ex post difference-in-differences estimation suggests a significant impact on long-term government bond yields, while the impact of the ECB's first QE on the key inflation rate is very weak. The term duration channel may also lead to a lengthening of the average maturity of government debts, with possible implications for fiscal policy. The ECB's determination to buy government bonds in a fragmented market with a low net supply is also producing an ex post impact, i.e. during the actual asset purchases. High rates volatility suggests that this impact is less on nominal rates and more on financial plumbing. As the effects of scarce supply in collateral markets are felt, repo rates remain well below zero. Low supply and limited re-usability of high quality collateral, capped by regulatory requirements, is an additional constraint on market liquidity and compresses dealers' balance sheets. By keeping a depressed yield curve and asset prices high, QE is also accelerating the consolidation of both traditional and capital-market based (dealer) bank business models, raising questions about implications for global collateral flows and deposit-like funding channels. [ABSTRACT FROM AUTHOR]

Long-term interest rates in Europe fell sharply in 2014 to historically low levels. This development is often attributed to yield-chasing in anticipation of quantitative easing by the European Central Bank. We examine how portfolio adjustments by long-term investors aimed at containing duration mismatches may have acted as an amplification mechanism in this process. Declining long-term interest rates tend to widen the negative duration gap between the assets and liabilities of insurers and pension funds, and any attempted rebalancing by increasing asset duration results in further downward pressure on interest rates. Evidence from the German insurance sector is consistent with such an amplification mechanism. [ABSTRACT FROM AUTHOR]

Starting in June 2014, the European Central Bank (ECB) stepped up its monetary accommodation in order to counter a too prolonged period of low inflation in the euro area. This article offers a narrative of the monetary policy measures taken up to December 2016 and a review of the effects of ultra-low interest rates. The exceptional monetary stimulus transmitted to the economy broadly as intended. Moreover, it enhanced the financial capacity of economic agents to bear risks. At the same time, the ECB and the European micro- and macro-prudential authorities remained watchful of the unintended side-effects of an extended period of very low or negative interest rates for financial intermediation, financial stability and market discipline and took preventive or corrective measures as appropriate. A joint plan of action carried out by the 19 member countries with the aim to speed up balance sheet repair, accelerate the economic recovery and achieve higher productivity growth could have contributed to a more effective euro area macroeconomic and financial policy mix. [ABSTRACT FROM AUTHOR]

The paper aims to look at the European Central Bank governance in terms of decisions taken to deploy a new kit of unconventional monetary policy measures, in order to respond to a new economic paradigm characterized by dynamic change in evolution, high volatility and enhanced financial risks. As an institution, the European Central Bank is led by the Governing Council and the decisions taken on how to use monetary policy impact an entire financial system. European Central Banking governance is about safeguarding the common currency and ensuring a future for the economic and monetary area to emerge stronger. For this purpose, when conventional monetary policies reach limits in their effects, it is time for the European Central Bank governance to analyse and assume the decision to deploy the arsenal of unconventional monetary policies. The experience of recent years showed a positive effect of the European Central Bank's unconventional monetary measures, but costs could rise in case of extensive use of such measures. When these measures are used in combination, the effect is amplified and the European Central Bank needs to assess when it is time to withdraw the support, how to communicate and what exit strategy should use, what the costs are and impact can expect. [ABSTRACT FROM AUTHOR]

The paper analyses quantitative easing (QE) in a dynamic general-equilibrium model which includes assets of different types and maturity. We explicitly model asset purchases by the central bank and their impact on the central bank's balance sheet. In particular, QE is captured by central bank purchases of long-term government bonds financed by enhanced liquidity provision to the private sector. With imperfect substitutability between asset classes, QE affects the term premium, stock prices, the exchange rate and the private sector's saving decision. We use the model to simulate the European Central Bank's (ECB's) QE path as announced in early 2015. With six basis points term-premium reduction the model generates 0.9 per cent effective euro depreciation and raises real GDP in the euro area by 0.3 per cent and prices by 0.5 per cent by 2016. Enduring periods of low interest rates strengthen the expansionary effect of QE in the short and medium term. Frontloading of asset purchases has little impact on output and inflation effects as long as the duration of the balance sheet expansion remains unchanged. Expansionary effects of QE are reduced if the central bank purchases eligible assets from foreign rather than domestic counterparties. [ABSTRACT FROM AUTHOR]

The article offers information related to the membership of Greece in the European Union and the eurozone governance. Topics discussed include the challenges faced by the eurozone after the Greek drama in 2015 such as slow economic growth and low oil prices, the standoff of the eurozone with Syriza, the economic outlook of the region in 2015, and the factors that drive the tentative economic recovery of the region. Also mentioned are fundamental developments in the monetary policy of the region such as the quantitative easing programme of the European Central Bank (ECB), the single supervisory mechanism (SSM), and the economic policy co-ordination.

The article examines the quantitative easing policy measures of central banks including the European Central Bank and the Bank of Japan to provide liquidity in response to financial crisis as of 2016. Topics include the factors to consider in implementing quantitative easing, the impact of quantitative easing on the economy and the economic problems in Japan following the introduction of negative interest rate in April.

By pumping trillions of euros into the eurozone's financial system, the ECB's quantitative easing programme intends to indirectly alter the private sector's borrowing and spending behaviour. After more than a year since its initial inception, a review of the programme's impact reveals that policy makers should think twice before further expanding the programme-and could benefit from considering more direct ways of increasing spending in the real economy. [ABSTRACT FROM AUTHOR]

The ECB's recently launched Expanded Asset Purchasing Programme is similar to the quantitative easing programmes undertaken by the US Federal Reserve, the Bank of England and the Bank of Japan. While theory suggests that quantitative easing can stimulate economic growth and spur inflation via several transmission channels, the empirical evidence is ambiguous and does not support strong stimulating effects, in particular for the current situation in the euro area. In addition, there are various risks and unintended consequences that may materialise in the medium or long run. [ABSTRACT FROM AUTHOR]

The article talks about an experiment by Swiss National Bank (SNB) after the bank decided to abolish lower bound for the euro of Swiss Franc (CHF) indicating changes in foreign exchange regime in central banks. Topics include real economy in Switzerland, status of foreign reserves, current account surplus, unemployment and deflation, impact of international crisis, quantitative easing by European CentralBank (ECB), monetary policy, and growth of gross domestic product(GDP).

The European Central Bank announced several measures to inject life into the Euro zone stagnant economy. One such measure is the decision to cut the deposit rate for the region's commercial banks from zero to minus 0.1 per cent. Something unusual and never heard before is this negative interest rate policy. It has lot of expectations and also brings forward a lot of fear along with it. With the entire Euro zone EC's measure is being seen as a gamble. Everyone is watching what impact will this policy? Will it bring bolster the economy and it will move forward or will it hit hard and push it back to uncertainty? Negative interest rate was present in Nordic countries having minimal effect on expected results. What can happen to Europe and is this policy the best that ECB had? [ABSTRACT FROM AUTHOR]

The European Central Bank was forced to start using non-standard measures in order to manage the situation determined by the global financial and sovereign debt crisis, namely to sort out liquidity problems and expand credit supply. The European Central Bank is criticized for applying non-standard tools because of increase in inflation risk. However, the analysis shows that the inflation could be managed by the absorption of liquidity surplus. However, there is a negative side of using non-standard measures, such as a significant increase in the credit risk, which arises due to having government bonds in the balance sheet of the European Central Bank. In addition, this indicates that the European Central Bank indirectly finances governments. [ABSTRACT FROM AUTHOR]

This article describes the circumstances of and motivations for the quantitative easing programs of the Federal Reserve, Bank of England, European Central Bank, and Bank of Japan during the recent financial crisis and recovery. The programs initially attempted to alleviate financial market distress, but this purpose soon broadened to include achieving inflation targets, stimulating the real economy, and containing the European sovereign, debt crisis. The European Central Bank and Bank of Japan focused their programs on direct lending to banks—reflecting the bank-centric structure of their financial systems—while the Federal Reserve and the Bank of England expanded their respective monetary bases by purchasing bonds. [ABSTRACT FROM AUTHOR]

Quantitative easing (QE) comes in many forms, each tailored to the specific needs of the region in question. What they all have in common, though, is that they are the result of the failure of conventional policy to deliver the outcomes policymakers want. There are many risks associated with unconventional tools such as QE and a number of drawbacks. But central banks around the world have taken risks with the future in a bid to avoid adverse consequences today or tomorrow. They hope that by the time QE draws to an end, they, the markets, the financial system and the wider economy will be able to manage those risks effectively. Whether they can remains to be seen. [ABSTRACT FROM AUTHOR]