Title: The Monetary Policy of the European Central Bank (2002-2015). CEPS Special Report No. 109/May 2015
Abstract: This paper examines the policies pursued by the European Central Bank (ECB) since the
inception of the euro. The ECB was originally set up to pursue price stability, with an eye
also to economic growth and financial stability as subsidiary goals, once the primary goal
was secured. The application of a single monetary policy to a diverse economic area has
entailed a pronounced pro-cyclicality in its real economic effects on the eurozone periphery.
Later, monetary policy became the main policy instrument to tackle financial instability
elicited by the failure of Lehman Brothers and the sovereign debt crisis in the eurozone. In
the process, the ECB emerged as the lender of last resort in the sovereign debt markets of
participating countries. Persistent economic depression and deflation eventually brought the
ECB into the uncharted waters of unconventional policies. That the ECB could legally
perform all of these tasks bears witness to the flexibility of the TFEU and its Statute, but its
tools and operating procedures were stretched to their limit. In the end, the place of the ECB
amongst EU policy-making institutions has been greatly enhanced, but has entailed repeated
intrusions into the broader domain of economic policies – not least because of its market
intervention policies – whose consequences have yet to be ascertained.
Publication Year: 2015
Publication Date: 2015-05-01
Language: en
Type: article
Access and Citation
Cited By Count: 26
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