European Central Bank

The European Central Bank is committed to price stability. Its medium-term goal is to keep the inflation rate at just under two percent. The ECB controls the interest rate on the interbank market, i.e. the market on which banks trade with each other and with the ECB, primarily by setting the prime rate.

Markus Demary / Michael Hüther ·
IW-Trends ·
3 Apr 2018

Is the European Central Bank’s Monetary Policy Still Appropriate?

The monetary policy of the European Central Bank is under fire from two sides. While one side regards the ECB’s monetary policy as too expansionary, the other holds it responsible for keeping the measured inflation rate below target.

Markus Demary / Jürgen Matthes ·
IW News ·
30 Jan 2018

New Euro area safe bonds: High risks for the ECB

An EU working group presented yesterday a feasibility study for sovereign bond-backed securities. These bonds are designed to reduce the vulnerability of the European banking sector to sovereign debt crises. The problem, however: Should there be any disruptions in the markets for these securities in the event of a crisis, the European Central Bank (ECB) would have to step in.

Markus Demary ·
IW News ·
15 Aug 2017

ECB: Monetary policy needs limits

The German Constitutional Court has rightly expressed doubts about the monetary policy of the European Central Bank (ECB) and has asked the European Court of Justice for a legal review of it. This time, the case is about the Public Sector Purchase Program (PSPP), within which the ECB has already purchased bonds worth 1.6 trillion euros. The limits on the asset purchases have to be clarified.