ifo DICE Report 1/2017 (Spring): The Price-Stability-Target in the Eurozone and the European Debt Crisis

Section: Forum – The Price-Stability-Target in the Eurozone and the European Debt Crisis

Seven years of the ongoing European debt crisis have transformed the Eurozone and the European Union, as well as the European Central Bank (ECB) and monetary policy in Europe. Recent years have seen zero or negative interest rates, programmess of generous long-term liquidity provision for commercial banks, and large-scale purchases of government bonds and other securities by the ECB. At the peak of the crisis, ECB President Mario Draghi in July 2012 assured the markets that the ECB would do “whatever it takes” to rescue the Eurozone. The ECB also became heavily involved in the macro-prudential analysis of issues relating to the stability of the financial system, banking supervision, and the possible application of a banking resolution mechanism. Based on these developments, many observers concluded that the ECB’s objectives and responsibilities have broadened, with some observers claiming that the ECB is overstepping its mandate. This setting provided the background for the conference on “The Price-Stability Target in the Eurozone and The European Debt Crisis” jointly organised by ESMT Berlin and the Max-Planck-Institute for Tax Law and Public Finance, which took place at ESMT in Berlin on September 28, 2016, and was co-funded by the Stiftung Geld und Währung. The Forum section of the 1/2017 issue of the ifo DICE Report features the key arguments from these discussions summarised in short essays by conference participants who are leading researchers, policy-makers, and practitioners in the fields of monetary policy, central banking and public finance.