In the latest set of EU stress tests, several German lenders performed poorly. As Markus Demary writes, some of this performance has been blamed on low interest rates squeezing the profitability of lenders. He argues that while the ECB has frequently been blamed for this situation, the reality is more complex and instead reflects long-term trends which can only […]
Soon after the sovereign debt crisis started taking a toll on European economies, several strikes and mass protests spread acoss the continent. Yet, while the crisis continued lingering on in some European countries, the mobilisation quickly ebbed away. Federica Genovese, Gerald Schneider and Pia Wassmann argue that one reason why people stopped going to the streets is that the Europan Central […]
The limits of German power: How ECB decisions have put constraints on Berlin’s management of the crisis
The German government has been at the heart of the EU’s response to the Eurozone crisis, but key decisions made by the European Central Bank, notably the introduction of a large ‘quantitative easing’ program, have occurred despite German opposition. Mattias Vermeiren writes that these two developments are intricately linked, with Germany’s pursuit of creditors’ interests generating unintended ‘spillover’ effects […]
Greece shows the flaws in pursuing a common monetary policy response to economic shocks across the EU
To what extent is the Greek debt crisis a function of wider flaws in the design of the single currency? Bruce Morley writes that while Greece’s debt already exceeded 100 per cent of GDP in the 1990s, it is not simply the size of a country’s debt that determines whether it is sustainable. He argues that the real problems […]
Earlier this year, the European Central Bank agreed to release minutes of its governing council meetings in response to criticism over the lack of transparency in its decision-making. Sebastian Diessner writes that while there are good reasons to support the ECB becoming more transparent, lessons should also be learned from the experiences of other central banks. He notes that […]
One of the most widespread arguments about the Eurozone crisis is that countries such as Greece, Spain and Italy have been hamstrung by their lack of monetary sovereignty and the ability to devalue their own currency. Deborah Mabbett and Waltraud Schelkle assess this perspective by comparing the experiences of Greece with Hungary, which does not use the euro, and […]
The European Central Bank will hold its latest policy meeting today. Ahead of the meeting, David Woodruff writes that while growth has resumed in the Eurozone, there are still serious problems across the single currency area, with unemployment at exceptionally high levels in several countries. He argues that the ECB’s primary focus should be on preventing deflation, and that […]
In December 2013 EU finance ministers negotiated an agreement aimed at establishing a banking union, with further talks between the European Parliament and the Member States ending in an agreement last week. Iain Begg provides a detailed overview of the main objectives of banking union and what has been agreed so far. He argues that while European leaders have […]
Why the European Court of Justice should reject the German Constitutional Court’s ruling on Outright Monetary Transactions
Despite having a positive effect on the economic situation within the Eurozone, the European Central Bank’s Outright Monetary Transactions (OMT) program has proved controversial, with the German Constitutional Court in Karlsruhe recently deeming it illegal under EU law. Paul De Grauwe argues that the ruling reflects a serious misunderstanding of central banking on the part of the German Court, and […]
Recent figures from Eurostat show that the Eurozone emerged from its recession in the second quarter of 2013. Harald Sander argues that while there are some ‘green shoots’ of recovery, the Eurozone crisis is far from over. He notes that there are still a number of key challenges to be overcome, with Eurozone unemployment levels and debt to GDP ratios […]
The EU’s incremental adjustments to the eurocrisis may not be enough to meet the coming challenges to its governance and democratic legitimacy.
Since the beginning of the eurozone debt crisis three years ago, the member states have been forced to change the governance of the eurozone in a long period of crisis management. Daniela Schwarzer looks over the major changes to the EU’s governance structure, arguing that the European Council, Germany, and the European Central Bank have moved to the centre stage, […]
The connection between fiscal and monetary policy is currently under scrutiny by the German Constitutional Court in the context of the European Central Bank’s (ECB) Outright Monetary Transactions bond-buying programme. Paul De Grauwe and Yuemei Ji argue that most analyses are deeply flawed by the misapplication of private-company default principles to the central bank. ECB bond-buying transforms public bonds into […]
The second Greek rescue programme was not merely late, but also insufficient, making a third programme inevitable.
Last week the IMF published a review of the financial assistance given to Greece during its debt crisis. One of the key limitations identified in the report was that debt relief for the country was provided far later than it should have been. Waltraud Schelkle writes on the fallout from the report, which generated angry responses from both the European […]
Brussels blog round-up for 1 – 7 June: IMF admits mistakes in Greek bailout, Brussels vs Brussels, and a red card for EU legislation?
Chris Gilson takes a look at the week in Brussels blogging. The EU centre and the crisis One of the main stories this week is the IMF’s admission that it made mistakes in the way that it and its Troika partners of the EU and European Central Bank (ECB) carried out Greece’s first bailout in 2010. The European Commission strongly disagreed […]
Economic divergences among Eurozone countries have played an increasingly important role in ECB decision-making since the start of the crisis.
Do national economic shocks, such as the debt crisis in Greece, influence ECB interest rate decisions? As Florence Bouvet and Sharmila King note, the ECB officially bases its decision-making on euro-wide data, rather than the situation in individual Eurozone countries. However, this ‘one size fits all’ approach may be inappropriate in cases where there are fundamental economic differences between individual […]
The Eurozone crisis has created huge volatility in the market for government bonds, with the heavily indebted countries on the Eurozone’s periphery facing significantly higher rates. One side effect of this volatility, writes Jens Boysen-Hogrefe, is that Germany has been seen as a “safe haven“ for those who wish to invest in government debt, leading to unusually low yields for […]
Brussels blog round-up for 20 – 26 April: Italy’s new Prime Minister, trust in the EU falls, and should all EU states recognise gay marriage?
Chris Gilson and Stuart A. Brown take a look at the week in Brussels blogging. The EU centre and the crisis This week saw European Commission President Jose Manuel Barroso admit that austerity may have reached its limit, according to Lost in EUrope, who wonder why he now dares to speak out in this way. The Centre for European Reform is […]
The Bundesbank’s disingenuous claim that Southern Europeans are richer than Germans has stoked anti-bailout sentiment.
Recent weeks have seen the German Central Bank and the European Central Bank release studies that have suggested that Germans have less wealth than Southern Europeans. Stefan Bauchowitz and José Javier Olivas argue that differences between the data used and the composition of German and Southern European households make this comparison largely meaningless. They write that the studies have been […]