1,721,111 research outputs found
The European Central Bank, the Single Supervisory Mechanism and the COVID-19 related economic crisis: a neofunctionalist analysis
Full text linkThe COVID-19 pandemic triggered a major economic crisis worldwide. The monetary policy response of the European Central Bank (ECB) was fast and massive. The ECB also intervened on the supervisory side because, after the establishment of Banking Union, the ECB was given responsibility for banking supervision in the euro area through the Single Supervisory Mechanism (SSM). This paper explains the response of the ECB-SSM to the COVID-19 related economic crisis during 2020 and 2021, up until February 2022. These ECB actions include the reduction of bank capital buffers, the redefinition of non-performing loans, and the limitations on dividends and bonuses paid by banks. We adopt a neofunctionalist approach, which suggests that policies are developed at the EU level in response to need, whereby supranational actors and spillovers are particularly important. We offer some concluding insights into whether the ECB-SSM’s responses have led to a further deepening of integration
Introduction: the new political economy of central banks: reluctant Atlases?
Full text linkAfter gaining independence from political authorities, the past decades, central banks in most of the Global North and some in the Global South have taken on additional goals, acquiring unprecedented powers, many of them in response to crises and a lack of forceful action by the political authorities. Central banks have also been confronted with new issues, such as the greening of the economy and digital finance. They have rediscovered ‘old’ roles–i.e. acting as lender of last resort, overseeing payment systems, supervising banks, issuing currencies (in a digital format)–and have taken on new roles. These roles include: ‘crisis managers’ of first resort, backstopping banks, non-banks, states and fellow central banks; ‘recession fighters’ of second resort as well as ‘quasi’ fiscal authorities; supporters of the green and digital transition; ‘sui generis diplomats’ fostering international cooperation, while behaving as hesitant ‘geoeconomic actors’ in an increasingly geopoliticised world. In the ‘new political economy of central banking’, these institutions can be seen as ‘reluctant Atlases’, at times, suffering from a lack of connection to central fiscal authorities (experiencing ‘loneliness’) and goal overstretching. Recent geopolitical turmoil presents new challenges to the liberal international order to which central banks are still seeking to respond
The COVID-19 pandemic and the European Union: politics, policies and institutions
Full text linkThe COVID-19 pandemic posed unprecedented challenges to the European Union (EU) and its member states. In the EU, health policy competence has been and remains largely with member states. However, faced with a major external crisis, which more or less affected all member states at the same time, the EU developed a framework within which the member states (and their subnational units) could respond together to the crisis. This introductory article to the Special Issue ‘The COVID-19 Pandemic and the European Union,’ briefly examines how EU institutions, policies and politics were affected by the crisis. Contrary to earlier crises, the EU responded speedily and effectively this time around. The EU has become increasingly important in crisis management, in part due to the nature of transboundary crises. The EU proved itself to be a good crisis manager on some dimensions, but certainly not on all. The crisis created momentum for collective action and for fast decision-making, even though the legitimacy of some these actions has been subject to limited public scrutiny
Weaponisation of finance: the role of European central banks and financial sanctions against Russia
Full text linkIn response to Russia’s full-scale invasion of Ukraine, the Group of Seven (G7) countries and the European Union (EU) adopted a variety of financial sanctions, including the freezing of foreign reserve assets of the Central Bank of Russia held by other central banks. Drawing on a Principal-Agent framework and on speeches, newspaper articles and interviews with policy-makers, this study examines what it means for the ECB and the central banks of the Eurosystem to be involved in these sanctions. As a consequence of these actions, these central banks have been enlisted in monetary and financial warfare. Moreover, the three-fold objective of the ECB has de facto effectively been reweighted somewhat, as the focus on ‘price stability’ (primary objective) has become seemingly temporarily less prominent. Instead, the secondary and tertiary objectives have moved centre-stage, favouring geopolitical considerations
The Geoeconomics of the Single Market for Financial Services
No full textWe discuss the geoeconomics of the Single Market in financial services in the European Union (EU). We examine three case studies that concern the EU and other major jurisdictions and that range from incipient geoeconomic use to outward weaponisation of the Single Market in finance. These cases are (1) the post-2008 crisis transatlantic tug of war, whereby the EU leveraged its Single Market vis-à-vis the United States, seeking to set the rules for global finance; (2) the Brexit negotiations, when the EU acted as a bloc against the United Kingdom and successfully safeguarded the integrity of the Single Market; and (3) the fulsome war in Ukraine, during which the EU ‘weaponised’ its Single Market through the adoption of financial sanctions against Russia. We argue that a combination of external and internal factors accounts for this pattern: the evolution of the international economic and political system, in particular, the increasing challenges to the liberal international order, and intra-EU developments, namely, the EU's ability to deploy its Single Market geoeconomically
Explaining the response of the ECB to the COVID-19 related economic crisis: inter-crisis and intra-crisis learning
Full text linkThe economic effects of the Covid-19 pandemic have placed a renewed strain on the economic governance of the European Union (EU). The European Central Bank (ECB) was a key player in the EU's response to the crisis induced by the pandemic. This paper adopts a theoretical approach focused on policy learning to explain how and why the ECB responded to the crisis in 2020-2021. By drawing on speeches, newspaper articles and interviews with policy-makers, the paper finds that the ECB was able to rely on earlier crisis experiences in the euro area in forming its response to the pandemic crisis. Although the sovereign debt crisis and the pandemic crisis had both similarities and differences from one another, the ECB was able to engage in inter-crisis and intra-crisis learning. Its learning concerned objectives, instruments as well as an awareness that timely and forceful response was crucial, so that the member states and other EU institutions had time to act
The European Central Bank: From a Price Stability Paradigm to a Multidimensional Stability Paradigm
Full text linkThis article maps and explains the shift in economic thinking at the European Central Bank (ECB), i.e., its "ideational" evolution over the past two decades. When the ECB was set up in 1999 its institutional design and epistemic outlook were very much inspired by the legacy of the German central bank, the Bundesbank. Thus, the ECB embraced a "price stability" paradigm that prioritized inflation control. However, over time, policy learning in response to economic shocks (first and foremost, a series of consecutive financial and economic crises from 2008 onwards) and the internal organic evolution of the ECB have led to a shift of economic thinking at the Bank, which has also been reflected by its policy actions. The new paradigm can be characterized as a "multidimensional stability" paradigm. By relying on inter alia secondary literature, speeches, semi-structured elite interviews, and data we collected concerning the previous experience at national central banks of senior ECB staff, we identify a novel causal mechanism for ideational change at the Bank: the change in the composition of senior managerial staff from 1999 onward
Asymmetric Globalization: Theoretical Principles and Pragmatic Behaviour Guiding Market Liberalization
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