What is the role played by the Eurosystem during the financial crisis ?
AbstractSince the onset of the financial crisis, the Eurosystem has cut interest rates on several occasions and has assumed an increasingly prominent role as a financial intermediary. It stepped up its lending to liquidity-constrained banks and at the same time gave cash-rich banks the opportunity to place their liquidity surpluses with a safe counterparty, the central bank. The Eurosystem acts as an intermediary not only for individual banks, but increasingly for national banking sectors as well, especially as a result of the sovereign debt turmoil and the close link between the financial situation of sovereigns and that of resident banking sectors. As a consequence, the Eurosystem’s balance sheet has expanded significantly and there has been dramatic growth in the TARGET2 positions of national central banks. The Eurosystem’s accommodative monetary policy is not without risks, however. The policy entails both financial risks for the central bank and possible negative macro-economic side effects. Nor do these actions offer a solution for all the challenges that the euro area is facing today. In order to tackle these challenges, structural measures and adjustments are needed. However, through its increased role as a financial intermediary the Eurosystem can buy the necessary time for the relevant actors to implement these measures in an orderly way.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by National Bank of Belgium in its journal Economic Review.
Volume (Year): (2012)
Issue (Month): II (September)
Contact details of provider:
Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles
Phone: (+ 32) (0) 2 221 25 34
Fax: (+ 32) (0) 2 221 31 62
Web page: http://www.nbb.be/
More information through EDIRC
Eurosystem; monetary policy; TARGET2; financial crisis;
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.