This paper explains and forecasts the demand for banknotes issued in Germany. For small and large denomination notes we estimate vector error correction models (VECM). The results suggest that the long-run demand for German small denomination notes is mainly driven by domestic transactions and...

This paper comments on the pros and cons of exit strategies. The focus is on the impact on the Euro area economy of the exit from unconventional monetary policies (UMP) by the Fed, which, appears to be the first central bank to lay out an exiting path. In this context, it discusses the issue of...

This paper comments on the role of the Monetary Dialogue in the context of an evolving monetary policy. The discussion is conducted in terms of the adoption of forward guidance on interest rates by the European Central Bank (ECB), the ECB’s model choice and data revision policies in inflation...

This article looks at the evolution of the Target balance of the Greek central bank. It is shown that in the first 18 months “after Lehman”, lending policy has been relatively lax, contributing to the increase of Target deficits. However, from spring 2010 onwards, there has been a...

We investigate the linkage between business cycle convergence and financial portfolio choice for a panel of 18 EU countries. We construct an index of similarity of financial portfolios which we then put into context with the view that “the financial world” has an impact on business cycles...

In this paper we describe the genesis of a doomsday scenario and discuss potential causes and motivations for a breakup of the euro area. For this purpose, we differentiate between the departure of weak and strong countries, and examine the impact of the reintroduction of a national currency on...

Small and medium size enterprises (SMEs) of southern euro-area economies (e.g. Italy, Spain) pay significantly higher borrowing rates than their peers of the core (e.g. Germany, France) and this divergence is widening. It is argued that severe market failures prevent SMEs in southern euro area...

This paper provides a first preliminary assessment of the recent two 3-year long-term refinancing operations (3Y LTROs) conducted by the ECB by putting them into a broader context. The perspective taken is that prevailing in the first half of the year 2012, directly after the path-breaking ECB...