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

  • Cour-Thimann, Philippine
  • Winkler, Bernhard

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. JEL Classification: E02, E40, E50, E58

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Paper provided by European Central Bank in its series Working Paper Series with number 1528.

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Date of creation: Apr 2013
Date of revision:
Handle: RePEc:ecb:ecbwps:20131528
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  1. G. Peersman, 2011. "Macroeconomic Effects of Unconventional Monetary Policy in the Euro Area," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/734, Ghent University, Faculty of Economics and Business Administration.
  2. Domenico Giannone & Michèle Lenza & Huw Pill & Lucrezia Reichlin, 2012. "The ECB and the Interbank Market," Working Papers ECARES ECARES 2012-005, ULB -- Universite Libre de Bruxelles.
  3. David Cobham & Yue Kang, 2012. "Financial crisis and quantitative easing: can broad money tell us anything?," Heriot-Watt University Economics Discussion Papers 1206, Department of Economics, School of Management and Languages, Heriot Watt University.
  4. Bonci, Riccardo, 2011. "Monetary policy and the flow of funds in the euro area," Working Paper Series 1402, European Central Bank.
  5. Fahr, Stephan & Motto, Roberto & Rostagno, Massimo & Smets, Frank & Tristani, Oreste, 2011. "A monetary policy strategy in good and bad times: lessons from the recent past," Working Paper Series 1336, European Central Bank.
  6. 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.
  7. Bindseil, Ulrich & Winkler, Adalbert, 2012. "Dual liquidity crises under alternative monetary frameworks: a financial accounts perspective," Working Paper Series 1478, European Central Bank.
  8. Ulrich Bindseil & Philippine Cour-Thimann & Philipp König, 2012. "Target2 and Cross-border Interbank Payments during the Financial Crisis," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 13(SPECIALIS), pages 83-92, 02.
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