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The Monetary Policy of the European Central Bank (2002-2015)

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  • Micossi, Stefano

Abstract

This Special Report examines the policies pursued by the European Central Bank (ECB) since the inception of the euro. The ECB was originally set up to pursue price stability, with an eye also to economic growth and financial stability as subsidiary goals, once the primary goal was secured. The application of a single monetary policy to a diverse economic area has entailed a pronounced pro-cyclicality in its real economic effects on the eurozone periphery. Later, monetary policy became the main policy instrument to tackle financial instability elicited by the failure of Lehman Brothers and the sovereign debt crisis in the eurozone. In the process, the ECB emerged as the lender of last resort in the sovereign debt markets of participating countries. Persistent economic depression and deflation eventually brought the ECB into the uncharted waters of unconventional policies. That the ECB could legally perform all of these tasks bears witness to the flexibility of the TFEU and its Statute, but its tools and operating procedures were stretched to their limit. In the end, the place of the ECB amongst EU policy-making institutions has been greatly enhanced, but has entailed repeated intrusions into the broader domain of economic policies – not least because of its market intervention policies – whose consequences have yet to be ascertained.

Suggested Citation

  • Micossi, Stefano, 2015. "The Monetary Policy of the European Central Bank (2002-2015)," CEPS Papers 10610, Centre for European Policy Studies.
  • Handle: RePEc:eps:cepswp:10610
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Papaioannou, Sotiris, 2016. "Public spending, monetary policy and growth: Evidence from EU countries," MPRA Paper 70331, University Library of Munich, Germany.
    2. van Riet, Ad, 2017. "Monetary Policy Stretched to the Limit: How Could Governments Support the European Central Bank?," MPRA Paper 83451, University Library of Munich, Germany.
    3. Mirdala, Rajmund, 2015. "Exchange Rate Pass-Through in the Euro Area," MPRA Paper 68862, University Library of Munich, Germany.
    4. Micossi, Stefano, 2016. "Balance-of-Payments Adjustment in the Eurozone," CEPS Papers 11250, Centre for European Policy Studies.
    5. Engelbert Stockhammer & Collin Constantine & Severin Reissl, 2016. "Explaining the Euro crisis: Current account imbalances, credit booms and economic policy in different economic paradigms," Working Papers PKWP1617, Post Keynesian Economics Society (PKES).
    6. Jean-Pierre Allegret & Audrey Allegret-Sallenave, 2016. "Intra-European Union Imbalances and Cyclical Position: Does Monetary Policy Matter?," Post-Print hal-01410832, HAL.
    7. repec:rfe:zbefri:v:35:y:2017:i:2:p:249-275 is not listed on IDEAS
    8. repec:erc:cypepr:v:11:y:2017:i:2:p:19-62 is not listed on IDEAS
    9. repec:eee:jpolmo:v:39:y:2017:i:2:p:272-289 is not listed on IDEAS
    10. Burriel, Pablo & Galesi, Alessandro, 2018. "Uncovering the heterogeneous effects of ECB unconventional monetary policies across euro area countries," European Economic Review, Elsevier, vol. 101(C), pages 210-229.
    11. Messori, Marcello & Micossi, Stefano, 2018. "Counterproductive Proposals on Euro Area Reform by French and German Economists," CEPS Papers 13438, Centre for European Policy Studies.

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