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

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  • Philippine Cour-Thimann
  • Bernhard Winkler

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 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. Copyright 2012, Oxford University Press.

Suggested Citation

  • Philippine Cour-Thimann & Bernhard Winkler, 2012. "The ECB’s non-standard monetary policy measures: the role of institutional factors and financial structure," Oxford Review of Economic Policy, Oxford University Press, vol. 28(4), pages 765-803, WINTER.
  • Handle: RePEc:oup:oxford:v:28:y:2012:i:4:p:765-803
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    File URL: http://hdl.handle.net/10.1093/oxrep/grs038
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    References listed on IDEAS

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    1. Domenico Giannone & Michele Lenza & Huw Pill & Lucrezia Reichlin, 2012. "The ECB and the Interbank Market," Economic Journal, Royal Economic Society, vol. 122(564), pages 467-486, November.
    2. Stephan Fahr & Roberto Motto & Massimo Rostagno & Frank Smets & Oreste Tristani, 2013. "A monetary policy strategy in good and bad times: lessons from the recent past," Economic Policy, CEPR;CES;MSH, vol. 28(74), pages 243-288, April.
    3. Bonci, Riccardo, 2011. "Monetary policy and the flow of funds in the euro area," Working Paper Series 1402, European Central Bank.
    4. Peersman, Gert, 2011. "Macroeconomic effects of unconventional monetary policy in the euro area," Working Paper Series 1397, European Central Bank.
    5. Bindseil, Ulrich & Winkler, Adalbert, 2012. "Dual liquidity crises under alternative monetary frameworks: a financial accounts perspective," Working Paper Series 1478, European Central Bank.
    6. Ulrich Bindseil & Philippine Cour-Thimann & Philipp König, 2012. "Target2 and Cross-border Interbank Payments during the Financial Crisis," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(SPECIALIS), pages 83-92, February.
    7. Drudi, Francesco & Durré, Alain & Mongelli, Francesco Paolo, 2012. "The interplay of economic reforms and monetary policy: the case of the euro area," Working Paper Series 1467, European Central Bank.
    8. David Cobham & Yue Kang, 2012. "Financial Crisis And Quantitative Easing: Can Broad Money Tell Us Anything?," Manchester School, University of Manchester, vol. 80, pages 54-76, September.
    9. Michele Lenza & Huw Pill & Lucrezia Reichlin, 2010. "Monetary policy in exceptional times," Economic Policy, CEPR;CES;MSH, vol. 25, pages 295-339, April.
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    More about this item

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • 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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