 |
 |
 |
 |
 |
 |
 |
In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
For years, observers of the European Central Bank (ECB) have been hearing the same line from its former President, Jean Claude Trichet: “We have one needle in our compass, and that is price stability.” This precept should contribute to understanding the central bank’s policy stance: When price stability is assured, there is no need to [...]
In the past couple weeks, there have been signals that change is coming to the forecasting and monetary policy process of the Bank of England—incremental change, but change nonetheless. Last year, the Court of the Bank of England commissioned three reviews of various aspects of the Bank’s performance during and after the financial crisis, which [...]
On March 12, President Vladimir Putin appointed Elvira Nabiullina, 49, chairwoman of the Central Bank of Russia. This is an important political appointment, and a reassuring one. Nabiullina is eminently qualified, and her selection puts the central bank in a safe pair of hands at a time of roiling uncertainty over other aspects of the [...]
In recent months, it has looked as if all the major nominally independent central banks in advanced economies are committed to, or seriously contemplating, intervention in the markets to lower the value of their currencies. Excluding commodity exporters like Canada, Australia, and Norway, everyone is on board—except the European Central Bank (ECB). Since September 2011, [...]
Adam S. Posen, who will take over as president of the Peterson Institute for International Economics in January, has delivered a few provocative parting calls to action as he exits his post as an external member of the Bank of England’s Monetary Policy Committee (MPC). His comments favoring more aggressive action by the central bank [...]
The euro area crisis keeps evolving along multiple dimensions. On the sovereign debt front, no deal is yet in sight on Greece’s debt restructuring, and Italy and Spain face major refinancing needs in early 2012. On the institutional reform front, the summit on December 9 fell short of delivering a true fiscal union, and tensions [...]
Yet another European Union summit meeting has come and gone surrounded by inflated expectations of a decisive breakthrough in the euro area debt crisis. Employing the same hyperbole applied to the Congressional budget "super committee"—despite the fact that the committee comprised the same members who had gridlocked on the issues beforehand—media commentators measured the summit [...]
The unthinkable is becoming possible. Until recently, the breakup of the euro area seemed nothing but an illusion, but suddenly this possibility is a clear and evident danger. If the euro area is to be broken up, it should be done as amicably, cleanly, symmetrically —and as fast as possible. A collapse of the euro [...]
On December 8, at its next governing council meeting, the European Central Bank (ECB) should reduce its interest rates by one percentage point to 25 basis points. Anything less would amount to dereliction of the ECB’s duty to the euro area economy. The euro area faces the deepest economic and financial crisis since the exchange [...]
Throughout modern economic history, every major financial crisis has been followed by premature abandonment—if not reversal—of the very stimulus policies necessary for sustained recovery. If the world is not to repeat that mistake, the Federal Reserve and the European Central Bank (ECB) must engage in further monetary stimulus, which today means purchasing additional government securities [...]