What Is the European Central Bank Supposed to Do?

Abstract

In July 2021, the European Central Bank (ECB) published a new monetary policy strategy, the first time in 17 years that it had undertaken a review of its monetary policy. In the intervening time, the world – and the economic challenges facing the ECB – have changed immensely but partly as a result of the ECB’s own maneuvering. In particular, monetary policy has been relied upon for every single malaise facing the global economy, including and up to the coronavirus pandemic. This paper argues that a review of central banks as an institutional mechanism in general, and in particular the ECB, was overdue but should not have been limited to policies; instead, an opportunity was missed to have an institutional review to examine whether or not it has been performing as intended. In particular, the vast experiment of unconventional monetary policy/issuance should have been more scrutinized from an institutional level as it appears to have contributed to the current problems the European economy faces. Europe and the ECB would be well served by taking stock of its actions over the past two decades and especially during the era of unconventional monetary policy to find a sustainable route forward.

Prilagodba monetarne politike eurosustava za vrijeme kriza

“…2020. imalo relativni udio od 26,52% u konsolidiranoj bilanci Eurosustava). Treba naglasiti da PEPP nije nova vrsta monetarne mjere Eurosustava, nego postojeća nestandardna mjera uvedena davne 2009., za vrijeme globalne ekonomske krize, ali je uvođenjem novog programa i budžeta prilagođena okolnostima pandemijske krize (Hartwell, 2023). Neto kupnje trajale su pune dvije godine, sve do kraja ožujka 2022., kada se već počela očekivati odluka WHO-a o kraju pandemije, tako da je ova nestandardna mjera monetarne politike Eurosustava sustavno provođena kroz cijelo vrijeme trajanja pandemije koronavirusa.…”

“…It is noteworthy that the PEPP is not a new type of monetary measure of the Eurosystem, but an existing non-standard measure introduced as early as 2009, at the time of the global economic crisis. However, by introducing a new programme and budget it was adjusted to the circumstances of the pandemic crisis (Hartwell, 2023). Net purchases lasted for two years, up to March 2022, when expectations rose that the WHO will declare the end of the pandemic.…”