What should the ECB “new normal” look like?
We review the set of arguments in favour of adding permanently balance sheet policies to the central bank toolkit. Balance sheet policies could support financial stability and complement the role of the standard – pre-crisis – policy to enhance macroeconomic stability. There are two major challenges though. The first one refers to the trade-off between effectiveness and distortions. Conventional interest rate policy aims at market neutrality whereas balance sheet policies target specific securities or markets by construction. We argue however that under inefficient financial markets, balance sheet policies would be helpful at mitigating market imperfections. The second challenge relates to communication. If central banks have two instruments at hands – interest rate and balance sheet policies – they must make clear how they use them and for what purpose in order to avoid sending a confusing signal on the monetary policy stance.
Análisis en profundidad
Autor externo
Christophe BLOT, Jérôme CREEL, Paul HUBERT (Sciences Po, OFCE)
Acerca de este documento
Tipo de publicación
Palabra clave
- análisis económico
- ASUNTOS FINANCIEROS
- balance
- Banco Central Europeo
- ECONOMÍA
- economía monetaria
- EMPRESA Y COMPETENCIA
- estabilidad financiera
- gestión contable
- instituciones de la Unión Europea y función pública europea
- libre circulación de capitales
- macroeconomía
- política monetaria única
- relaciones monetarias
- tipo de cambio
- UNIÓN EUROPEA
- valor de renta fija
- zona euro