Abstract
The paper analyses the monetary policy responses of the European Central Bank (ECB) to the global financial crisis and the European sovereign debt crisis. Our goals are on the one hand to explain chronologically the main measures in conventional and unconventional policies adopted by the ECB and on the other hand to analyse their effects on key interest rates, monetary aggregates and the money multiplier. The assessment is that the ECB?s monetary policy responses to the crisis have been ?too little, too late?, constrained by the institutional framework, which prevents the ECB from acting as a true central bank with the role of lender of last resort.
Highlights
Various empirical papers have analysed the European Central Bank (ECB)’s monetary policy during the financial and the European sovereign debt crises
Since the outbreak of the international financial crisis, central banking’s dull times have been left behind and instead a more active monetary policy has been implemented by the ECB and by other major central banks
In the light of this assessment, we argue that the ECB’s monetary policy responses to the crisis have been “too little, too late”, constrained by the institutional framework, which hinders it from acting as a true central bank in its traditional role as lender of last resort
Summary
Various empirical papers have analysed the ECB’s monetary policy during the financial and the European sovereign debt crises Within this body of research, two points have been highlighted: the change in the transmission mechanism during the crises and the heterogeneity and fragmentation of the Eurozone. Their results show that the transmission mechanism is time-varying and is influenced by the fragility of sovereign debt, firms, banks and households
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
