IMFS Interdisciplinary Studies

This study brings together contributions from The ECB and Its Watchers XX conference on September 30, 2020 at Goethe University Frankfurt, which was organized by the Institute for Monetary and Financial Stability (IMFS). This conference served as one of the listening events with academics by the European Central Bank. Topics include discussions about the ECB's mandate, the ECB's instruments, and the ECB's monetary policy strategy as well as a President's Address by ECB President Christine Lagarde and a Conference Wrap-Up by Philip R. Lane, Member of the Executive Board of the ECB.

This volume is based on speeches and presentations at the 5th IMFS Conference on Monetary and Financial Stability organized jointly with the Société Universitaire Européenne de Recherches Financières (SUERF) and Deutsche Bundesbank on the creation of the European Systemic Risk Board (ESRB) as part of the European System of Financial Supervision (EFSF) on 16 December 2010. It contains chapters by Hermann Remsperger, Stephen G. Cecchetti, Stefan Ingves, Alberto Giovannini, Jens Weidmann, Alexandro Vardoulakis, Stefano Neri, Jürgen Stark, Elöd Takáts and Christian Upper, Claudia M. Buch, Sandra Eickmeier and Esteban Prieto, Abdul Abiad, Giovanni Dell'Ariccia and Bin Li as well as Francesco Mazzaferro. The study is edited by Stefan Gerlach, Ernest Gnan and Jens Ulbrich.

The debates and speeches at “The ECB and Its Watchers” conference 2012 focused on banking regulation, monetary policy, and economic adjustment in the euro area. This study contains the following chapters:

Introduction
Volker Wieland

President's Address
Mario Draghi

Structural Reform in Banking
John Vickers

Heterogeneity in a monetary union
Peter Praet

ECB liquidity provision in stressful times: Has it been sufficient, appropriate or excessive?
Lucrezia Reichlin

Divergence and Adjustment in the Euro Area
Vitor Gaspar

Euro Area Fiscal Governance: Shortcoming, State of Play, Future
Lucio Pench

Fiscal Consolidation
Stefan Gerlach

From the OMT Announcement to the 2013 Hearings of the German Constitutional Court
Helmut Siekmann and Volker Wieland

This study contains articles based on speeches at the symposium held in February 2012 in honor of Stefan Gerlach's contributions to the IMFS:

Introduction

Helmut Siekmann and Volker Wieland
Central Banking and Banking Supervision in the Euro Area
European Monetary and Financial Union - What is needed in terms of Banking Supervision

Sabine Lautenschläger
Five Hopes and five fears about European Banking Union

Patrick Honohan
The History of Central Banks and the European Banking Union

Benoit Coeuré
Monetary Policy, Fiscal Policy and the Politics of EMU
The Politics of the Euro Area Crisis and ECB Monetary Policy

Athanasios Orphanides
The Resolution of the Euro and Sovereign Debt Crisis: Three Scenarios

Michael Burda
Concluding Remarks

Stefan Gerlach
 

On the occasion of the European Court of Justice’s Advocate General summing up of the OMT case in January 2015, this issue compiles various articles on the ECB's Outright Monetary Transactions (OMT): 

Introduction, 

The German Constitutional Court's decision on OMT: Have markets misunderstood?, 

Helmut Siekmann and Volker Wieland: An analysis of the OMT case from an EU law perspective, 

Antonio Luca Riso: Legal Limits of Central Banking, Christoph Degenhart: Remarks on the OMT Program of the ECB

Over the past years, the European Central Bank (ECB) has adopted a new course. Its expansionary monetary policy has reached an unprecedented scale. With quantitative easing (QE), the ECB has almost quadrupled its balance sheet. The aim of this study is to shed some light on this phenomenon.

As a starting point, Peter Praet illustrates the expansionary monetary policy from the ECB’s point of view, giving account on the use of QE in response to disinflationary pressures. He outlines the impact on financial conditions as well as output and inflation, reaching the conclusion that “a strong and sustainable recovery from the crisis requires a comprehensive response that involves all economic policies“.

Subsequently, Julian Callow shares his view on QE from a markets perspective. In this context, Callow analyzes whether the “implicit intention of QE” has been reached, that is “to depress real yields and raise inflation expectations“.

In their joint contribution, David Folkerts-Landau and Stefan Schneider identify the risks that emerge in connection with QE. In their view, the increasing concentration of risk on the Eurosystem balance sheet is alarming. However, according to the authors, the detrimental impact is even worse.

Looking back at the collapse of Lehman Brothers in September 2008 and, thus, a collapse in rates of growth of net banking credit and total net new bond issues, Alex Cukierman draws some lessons for the debt crisis in the euro area.

In their joint contribution, Günter Beck and Volker Wieland focus on the end of QE, making a proposal how to normalize monetary policy in the euro area. In this regard, they look at the key challenges of the exit and describe the need to develop an exit strategy in an environment characterized by financial and fiscal dominance fears.