Currency and Financial Markets ECB Europe Monetary Policy

Statement on Today’s Decisions of ECB’s Governing Council 07/16/2015

The ECB has sent a strong signal of trust in the implementation of a third program by increasing its ELA support to Greek banks. The ECB underlines that it considers Greek banks fundamentally solvent. Mr. Draghi is optimistic that a bridge financing will be in place to cover Greek repayments to the ECB on 20 July.… [continue reading]

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Currency and Financial Markets Europe Monetary Policy

An Overwhelming Success for the European Central Bank

The decision by the European Court of Justice (ECJ) is an overwhelming success for the European Central Bank (ECB). The OMT program has been ruled to be fully consistent with European law. The ruling means that the ECB has an additional, important monetary policy instrument to fight the European crisis. It implies that the OMT program has not become superfluous with the start of the current QE program of the ECB. On the contrary, a Grexit and renewed intensification of … [continue reading]

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Currency and Financial Markets Europe Macroeconomics Monetary Policy

Giving Greece a Chance

Opinion piece by members of the Eiffel Group and the Glienicke Group, 20 May 2015

The Greek tragedy must not go on. Europe’s growing frustration with the new Greek government has triggered calls for stopping negotiations and even accepting “Grexit”, Greece’s exit from the euro. We believe that this would be a mistake. Grexit would be a collective political failure. Above all, it would cause a social and economic catastrophe for Greek citizens.

However, keeping Greece in the euro … [continue reading]

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Currency and Financial Markets Economic Policy Foreign Trade and International Economic Relations Macroeconomics Public Finances and Financial Economics

GDP-linked bonds as a key for a sustainable recovery of the Greek economy

The Greek government yesterday proposed the transformation of part of its official debt into GDP-linked bonds. DIW Berlin has published a detailed study, which analyses how such an instrument might work. DIW Berlin considers this proposal as a constructive option to improve debt sustainability, which will ultimately foster a return to economic growth. Such a solution will help Greece accept ownership of its reform prorgramme – which is the key for a sustainable recovery of the economy. It is … [continue reading]

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Currency and Financial Markets Economic Policy Monetary Policy

Decision of ECB sends a strong and convincing argument

The decision of the ECB sends a strong and convincing argument that it is determined to pursue its mandate of price stability. The programme constitutes a necessary step to help end the European crisis. We don’t have to like the programme, but we should support it to give Europe a perspective for the future.

The size of the purchase programme sends a credible signal to financial markets, also as it exceeds expectations. The ECB rightly underlines the urgent responsibility of … [continue reading]

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Currency and Financial Markets Europe Monetary Policy

The ECB’s dilemma

by Marcel Fratzscher, Michael Hüther and Guntram B. Wolff.
This text was also published on
BerlinOeconomicus (German), in Le Monde  and in El País.

As the ECB is likely to announce a government bond purchase programme on January 22, the opposition in Germany is growing. The potential election of a government in Greece with its intention to restructure debt towards its official creditors puts the upcoming ECB’s decision under even greater scrutiny. The fact that the ECB has … [continue reading]

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Currency and Financial Markets Foreign Trade and International Economic Relations

Decision by the Swiss National Bank was Long Overdue

The decision by the Swiss National Bank (SNB) was long overdue. Its exchange rate policy hat protected Swiss exporters and helped their competitiveness through a weaker Swiss franc. But this policy could prove a very expensive mistake, because the Swiss franc will had to appreciate against the euro in the foreseeable future. The valuation losses for the DNB could therefore become substantial. The timing of the decision by the SNB is certainly not a coincidence. The expectations of an ECB … [continue reading]

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Business Cycles, Growth, Economic Structure Currency and Financial Markets Economic Policy Europe Foreign Trade and International Economic Relations Macroeconomics

Sanctions Blowback

This article was first published on Project Syndicate on 14 August 2014.

With the crisis in Ukraine intensifying, the United States and the European Union are locked in a battle of wills – and sanctions – with Russia. Indeed, in retaliation for the intensification of Western financial sanctions, Russia has announced a ban on food and agricultural imports from the US and the EU. But the real threat to the West lies in the potential impact of a financial crisis … [continue reading]

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