Journal Article

The ECB’s non-standard monetary policy measures: the role of institutional factors and financial structure

Philippine Cour-Thimann and Bernhard Winkler

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 28, issue 4, pages 765-803
Published in print January 2012 | ISSN: 0266-903X
Published online December 2012 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/grs038
The ECB’s non-standard monetary policy measures: the role of institutional factors and financial structure

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  • Monetary Policy, Central Banking, and the Supply of Money and Credit
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This paper aims to make two contributions: to review the ECB’s non-standard monetary policy measures in response to the financial and sovereign debt crisis against the background of the institutional framework and financial structure of the euro area; and to interpret this response from a flow-of-funds perspective. The paper highlights how the ECB’s non-standard measures are motivated differently from quantitative easing policies. As a complement to standard interest rate decisions, rather than a substitute, they aim at supporting their effective transmission to the economy rather than at delivering additional monetary stimulus directly. The flow-of-funds analysis proposes an interpretation of central banks’ crisis response as reflecting their capacity to act as the ‘ultimate sector’ that can take on leverage when other sectors are under pressure to deleverage. It also provides examples for tracing the impact of non-standard measures across different sectors and markets.

Keywords: monetary policy; asset purchases; financial structure; European monetary union; sovereign debt crisis; flow of funds; E02; E40; E50; E58

Journal Article.  16836 words.  Illustrated.

Subjects: Monetary Policy, Central Banking, and the Supply of Money and Credit ; Money and Interest Rates ; Macroeconomics and Monetary Economics

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