While the formal decision of the ECB Council to impose interest on Target claims and liabilities is meaningless, this … paper shows that the pooling of primary interest income among national central banks in the Eurozone implies that Target and … cash balances do, in fact, bear an effective rate of interest. The magnitude of this effective rate of interest is given by …

We derive four sets of counterfactual national interest rate paths for the 17 Euro Area countries for the time period … 1999 to 2012. They approximate desirable national interest rates countries would have liked to implement if they could … still conduct independent monetary policy. We find that prior to the financial crisis the counterfactual interest rates for …

inflation expectations. As a result, they mute their interest rate response and no longer fully offset anticipated demand shocks …

why the current global low interest rate environment is likely to prevail. …