Documents Bibow, Jörg 8 results

"The euro crisis remains unresolved and the euro currency union incomplete and extraordinarily vulnerable. The euro regime's essential flaw and ultimate source of vulnerability is the decoupling of central bank and treasury institutions in the euro currency union. We propose a Euro Treasury scheme to properly fix the regime and resolve the euro crisis. The Euro Treasury Plan would establish a rudimentary fiscal union that is not a transfer union. The core idea is to create a Euro Treasury as a vehicle to pool future eurozone public investment spending and have it funded by proper eurozone treasury securities. The Euro Treasury could fulfil a number of additional purposes while operating mainly on the basis of a strict rule. The plan would also provide a much-needed fiscal boost to recovery and foster a more benign intra-area rebalancing."

"Der Beitrag analysiert die Rolle und die Politik der Europäischen Zentralbank (EZB) innerhalb der europäischen Wirtschafts- und Währungsunion (WWU). Hierzu wird die hervorgehobene Position der EZB im Maastrichter Regime der WWU herausgearbeitet, wobei besonders auf die grundlegenden Fehler bei der Konstruktion des makroökonomischen Regimes eingegangen wird. Der Autor zeigt anhand der jüngeren Entwicklung, dass der vermeintlich stabilitätsorientierte Kurs der EZB durch schwere Politikfehler gekennzeichnet ist, die zu gravierenden makroökonomischen Fehlentwicklungen maßgeblich beitrugen, einschließlich jener Ungleichgewichte und Verwerfungen, die den Hintergrund zur heutigen Euro-Krise bildeten. Die durch diese Krise erzwungenen Reaktionen der EZB zeigen allerdings, dass auch die EZB inzwischen zum Euro-Verlierer geworden ist, da ihr eigenes Schicksal selbst bei gegebener Unabhängigkeit an den Euro gekoppelt bleibt. Und der Euro und der Prozess der europäischen Integration scheint gefährdet, auch aufgrund der Politik der EZB."

"This study assesses the ECB's 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 ECB 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 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, ending up in its current predicament. The study also finds that expectations regarding the ECB's latest policy initiatives may be excessively optimistic and that proposals featuring the ECB 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 towards fiscal policy, by partnering up the ECB with a "Euro Treasury" as a vehicle for the central funding of public investment through common euro treasury debt securities in particular."

"The euro crisis remains unresolved even as financial markets may seem calm for now. The current euro regime is inherently flawed. Recent reforms have failed to turn the dysfunctional euro regime into a viable one. The investigation is informed by the "cartalist" critique of traditional "optimum currency area" theory (Goodhart 1998). Various proposals to rescue the euro are assessed and found lacking. A Euro Treasury scheme operating on a strict rule and specifically designed not to be a transfer union is proposed here as condition sine qua non for healing the euro's potentially fatal birth defects. The Euro Treasury proposed here is the missing element that will mend the current fiscal regime that is unworkable without it. The proposed Euro Treasury scheme would end the currently unfolding euro calamity by switching policy from a public thrift campaign that can only impoverish Europe to a public investment campaign designed to secure Europe's future. No mutualization of existing national public debts is involved. Instead, the Euro Treasury is established as a means to pool eurozone public investment spending and have it funded by proper eurozone treasury securities."

"This Working Paper examines options for the design of a workable fiscal union for the euro area. It provides a comparative study of fiscal institutions in the US and euro area in order to supply lessons from the operation of the US fiscal regime that could inform the design of the, hitherto dysfunctional, euro regime. The paper argues that common, rather than asymmetrical, shocks are the norm in the euro area and that the euro's institutions are seriously deficient in dealing with area-wide recession and systemic financial crises."

"The European Central Bank (ECB) is a special, even unique central bank. It is a central bank without a treasury by its side or a state behind it, just as the euro, Europe's common currency that the ECB is tasked with guarding, is a ‘denationalised' currency. The euro area is a rare exception to the global ‘one state, one currency' rule. But the ECB is not the only central bank in the euro area. Rather, the ECB is designed as the headquarters (or perhaps ‘cockpit') of the Eurosystem, the system of European central banks that also includes the national central banks (NCBs) of European Union (EU) member countries that have adopted the euro as their common currency.

The euro has failed to deliver on its promises. While the euro area's performance during the euro's first decade was mediocre, things turned truly dismal when the global fi nancial crisis of 2007–2009 struck. In contrast to the rest of the world, which started to recover from the crisis in 2010, the euro area suffered a ‘double-dip' recession. Only since 2013 has the euro currency union experienced a fragile, uneven and incomplete revival.

This study evaluates the ECB's unconventional monetary policies and its role as euro crisis manager under Mario Draghi's presidency, exploring the options available for adding further monetary policy stimulus going forward.

As the euro's central bank guardian, the ECB has been a central force throughout the crisis and its aftermath. Many observers would argue that among the euro area authorities the ECB stands out as the most constructive. ECB president Mario Draghi's famous ‘whatever it takes' declaration in July 2012 stopped the escalating crisis and marked a critical turning point. As the euro area's uneven growth slowed markedly in 2018–2019 and the recovery increasingly appeared at risk of unravelling, all eyes once again turned to the ECB to come up with another ‘whatever it takes' attack-plan to restore the positive momentum and keep the recovery alive. The ECB duly delivered a fresh monetary stimulus programme in autumn 2019, prompting new controversies, especially in Germany.

But how much ammunition does the ECB really have left? Will it be enough to restore sustainable growth and save the euro for good?"