The ECB updated its monetary policy strategy for the first time in 18 years in July 2021. Therein, the ECB announced that it is willing to accept a transitory period of moderate inflation overshoot in its efforts to push inflation upwards after a long period of undershooting its target. This...

In response to the financial crisis, the ECB has had to adopt new instruments to support the euro area economy and preserve the integrity of the single currency. This has challenged the current framework of the Monetary Dialogue exercise. This paper briefly assesses the implications of enhanced...

Rising debt levels have caused a revival of financial repression in the euro area and the USA. The Federal Reserve directly represses US bond yields and assists in financing the state budget, resulting in an overall liquidation effect from falling bond yields of about three per cent of total...

Collateral plays a central role in monetary policy. In recent years, its importance has increased as uncollateralised inter-bank borrowing has gradually been replaced by collateralised central bank lending. This has in turn affected collateral availability and the need for high-quality assets....

Two recent proposals for overcoming the euro area crisis make the case for monetary financing of the public sector. Watt proposes that the ECB finances public investment directly, while Pâris and Wyplosz contend that public debt may be effectively restructured by burying parts of it in the...

This paper analyses the adjustment mechanism in the euro area prior to the crisis. Results show that the real exchange rate adjusted to redress cyclical divergences and that after monetary unification, real exchange rate dynamics became less reactive to country-specific shocks but also less...