(Monetary) Policy Options for the Euro Area: A Compendium to the Crisis

Advancing the Monetary Policy Toolkit through Outright Transfers

“…54 During the height of the euro crisis between 2010 and 2012, the premature withdrawal of fiscal support and lack of adequate risk sharing mechanisms hampered effective crisis responses and contributed to the double-dip recession that the euro area was experiencing in 2012 in contrast to other advanced economies (cf. Bützer, 2017).…”

“…Even prior to the outbreak of COVID-19, most advanced economies had been stuck at or close to the effective lower bound (ELB) for several years. Due to persistently sluggish demand and insufficient fiscal support, central banks have been resorting to an ever expanding array of unconventional monetary policies in order to meet their price stability target and broader economic goals (Bützer, 2017). While expansionary monetary policy has been needed to stem off deflationary pressures, support growth, and stabilize employment, the employed measures -in particular negative interest rates, large scale asset purchases, and long-term lending operations -have been relatively untargeted and therefore limited in their effectiveness.…”

Unconventional monetary policies, with a focus on quantitative easing

“…A variant of this QE with non-bank agents has been made by a number of organizations and even by some scholars (Bützer 2017). This is QE for the people, also sometimes called helicopter money.…”