The ECB’s Non-Standard Monetary Policy Measures: The Role of Institutional Factors and Financial Structure

46 Pages Posted: 9 May 2013

See all articles by Philippine Cour-Thimann

Philippine Cour-Thimann

European Central Bank (ECB)

Bernhard Winkler

European Central Bank (ECB)

Date Written: March 25, 2013

Abstract

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 rationale behind the ECB’s nonstandard measures differs from that underlying quantitative easing policies. As a complement to rather than a substitute for standard interest rate decisions, the non-standard measures are aimed at supporting the effective transmission of monetary policy to the economy rather than at delivering additional direct monetary stimulus. The flow-of-funds analysis proposes an interpretation of central banks’ crisis responses as fulfilling their traditional role as lender of last resort to the banking system and, more broadly, 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 that trace the impact of non-standard measures across different sectors and markets.

Keywords: Monetary policy, asset purchases, financial structure, economic and monetary union, sovereign debt crisis, flow of funds

JEL Classification: E02, E40, E50, E58

Suggested Citation

Cour-Thimann, Philippine and Winkler, Bernhard, The ECB’s Non-Standard Monetary Policy Measures: The Role of Institutional Factors and Financial Structure (March 25, 2013). ECB Working Paper No. 1528, Available at SSRN: https://ssrn.com/abstract=2239093 or http://dx.doi.org/10.2139/ssrn.2239093

Philippine Cour-Thimann (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Bernhard Winkler

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0049 69 1344 6000 (Fax)

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