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Central Banks in Times of Crisis: The FED vs. the ECB

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  • Gros, Daniel
  • Alcidi, Cinzia
  • Giovannini, Alessandro

Abstract

Different economic and financial structures require different crisis responses. Different crises also require different tools and resources. The first ‘stage’ of the financial crisis (2007-09) was similar on both sides of the Atlantic, and the response was also quite similar. The second stage of the crisis is unique to the euro area. Increasing financial disintegration within the region has forced the ECB to become the central counterparty for the entire cross-border banking market and to intervene in the sovereign bond market of some stressed countries. The actions undertaken by the European Central Bank (ECB), however, have not always represented the best response, in terms of effectiveness, consistency and transparency. This is especially true for the Securities Markets Programme (SMP): by de facto imposing its absolute seniority during the Greek PSI (private sector involvement), the ECB has probably killed its future effectiveness.

Suggested Citation

  • Gros, Daniel & Alcidi, Cinzia & Giovannini, Alessandro, 2012. "Central Banks in Times of Crisis: The FED vs. the ECB," CEPS Papers 7160, Centre for European Policy Studies.
    • Handle: RePEc:eps:cepswp:7160
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    File URL: http://www.ceps.eu/system/files/book/2012/07/PB276%20DG%2C%20CA%20%2526%20AG%20Central%20Banks.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ansgar Belke, 2013. "Towards a Genuine Economic and Monetary Union—Comments on a Roadmap," Politics and Governance, Cogitatio Press, vol. 1(1), pages 48-65.
    2. Alcidi, Cinzia & Giovannini, Alessandro & Piedrafita, Sonia, 2014. "Enhancing the Legitimacy of EMU Governance," CEPS Papers 9914, Centre for European Policy Studies.
    3. Florentina Melnic, 2017. "The Financial Crisis Response. Comparative Analysis Between European Union And Usa," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 19, pages 129-155, June.
    4. Galariotis, Emilios C. & Krokida, Styliani-Iris & Spyrou, Spyros I., 2016. "Herd behavior and equity market liquidity: Evidence from major markets," International Review of Financial Analysis, Elsevier, vol. 48(C), pages 140-149.
    5. Lannoo, Karel, 2013. "The New Financial Regulatory Paradigm: A transatlantic perspective," CEPS Papers 7856, Centre for European Policy Studies.
    6. Galariotis, Emilios & Makrichoriti, Panagiota & Spyrou, Spyros, 2018. "The impact of conventional and unconventional monetary policy on expectations and sentiment," Journal of Banking & Finance, Elsevier, vol. 86(C), pages 1-20.
    7. Jakob Eberl & Christopher Weber, 2014. "ECB Collateral Criteria: A Narrative Database 2001–2013," ifo Working Paper Series 174, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    8. Ansgar Belke & Florian Verheyen, 2014. "The Low-Interest-Rate Environment, Global Liquidity Spillovers and Challenges for Monetary Policy Ahead," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 56(2), pages 313-334, June.
    9. Stefano Micossi, 2015. "The Monetary Policy of the European Central Bank (2002-2015)," Bruges European Economic Policy Briefings 35, European Economic Studies Department, College of Europe.
    10. Ansgar Belke & Florian Verheyen, 2013. "Europäische Geldpolitik während der europäischen Schuldenkrise: Synopse und Evaluation," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 82(2), pages 97-112.
    11. Krokida, Styliani-Iris & Makrychoriti, Panagiota & Spyrou, Spyros, 2020. "Monetary policy and herd behavior: International evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 386-417.
    12. Aitor Erce, 2014. "Cross‐Border Banking, Externalities And Sovereign Distress: Does The Euro Need A Common Banking Authority?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 19(3), pages 188-203, July.
    13. Meier, Samira & Rodriguez Gonzalez, Miguel & Kunze, Frederik, 2021. "The global financial crisis, the EMU sovereign debt crisis and international financial regulation: lessons from a systematic literature review," International Review of Law and Economics, Elsevier, vol. 65(C).

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