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What is the role played by the Eurosystem during the financial crisis ?


  • J. Boeckx

    (National Bank of Belgium, Research Department)


Since 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.

Suggested Citation

  • J. Boeckx, 2012. "What is the role played by the Eurosystem during the financial crisis ?," Economic Review, National Bank of Belgium, issue ii, pages 7-28, September.
  • Handle: RePEc:nbb:ecrart:y:2012:m:september:i:ii:p:7-28

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    References listed on IDEAS

    1. Obstfeld, Maurice, 1996. "Models of currency crises with self-fulfilling features," European Economic Review, Elsevier, vol. 40(3-5), pages 1037-1047, April.
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    Cited by:

    1. Olivier Accominotti & Barry Eichengreen, 2016. "The mother of all sudden stops: capital flows and reversals in Europe, 1919–32," Economic History Review, Economic History Society, vol. 69(2), pages 469-492, May.
    2. N. Cordemans & M. Deroose & M. Kasongo & A. Stevens, 2016. "The ABC of quantitative easing - Or the basics of central bank asset purchases," Economic Review, National Bank of Belgium, pages 29-41.
    3. Serranito, Francisco, 2015. "Dévaluation interne, politiques structurelles et réductions des déficits publics : les réponses apportées par la « troïka » sont-elles un remède aux déséquilibres externes des pays périphériques de la," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 18.
    4. M. de Sola Perea & Ch. Van Nieuwenhuyze, 2014. "Financial integration and fragmentation in the euro area," Economic Review, National Bank of Belgium, issue i, pages 99-125, June.

    More about this item


    Eurosystem; monetary policy; TARGET2; financial crisis;

    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


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