Introduction – Bulgaria’s recent announcement On 17 February, Bulgarian finance minister Rositza Velkova announced that, rather than continue as planned with the full, formal adoption of the euro on 1…
euro
IREF Newsletter
Croatia has Joined the Eurozone. Let’s Look at the Upside, with also a little Caution
by
Bob Lyddon and Gordon Kerr
by
Bob Lyddon and Gordon Kerr
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Introduction – Recent ECB Policy Developments Croatia became the 20th Eurozone member on January 1. Regular readers know our often expressed view that the euro is a deeply flawed currency…
IREF Newsletter
To what Extent Can the ECB Override Financial Markets?
by
Gordon Kerr, Bob Lyddon and Enrico Colombatto
Towards the end of August, every year investors focus on the Jackson Hole conference of the central banking global elite. Given widespread acceptance among central bankers that non-temporary inflation is…
This article analyses the disparity between the substance of what was announced and the language put around it by the ECB, mainly in the press release on its Monetary Policy…
Ladies and Gentlemen, please welcome to the stage Dutch Disease, 2nd edition. This time it’s not natural wealth that makes you poor, it’s a natural consequence of a poor policy.
IREF Newsletter
June’13 Newsletter: New Members Join The European Union, While Bail-Outs And Banking Regulation Are Questioned
by
Kevin Dowd
Welcome to the clubs! Why should they join? The crisis is not over and doubts about the virtues of the EU and the euro abound. It may therefore seem surprising…
Despite being bombed by information, it seems we have forgotten the roots of the debt crisis. Instead we play a martingale game, where the only precaution after losing a round is to double the bet for the next one. The solution is not called EFSM, EFSF, ESM, SMP, OMT or banking union. These are just different names for a single problem: diluted responsibility. Unless we find a way to make local politicians pay locally for local promises, the euro project will be always in trouble.
In March 2010, when the Greek debt crisis was heating up, then-ECB president Jean Claude Trichet declared to the EU parliament that the “monetary Union in Europe is far more than a monetary arrangement. It is a union of shared destiny”. Less than two months later the ECB reversed its refusal to monetize debt and openly started buying government bonds in violation of its own charta. Germany also gave up its reservations about bailing out other countries. A first aid deal for Greece was signed and, because that didn’t help for long, a Euro rescue package to the tune of € 750 billion was put in place.
According to various Internet sources, Irish banks would have borrowed €51bn from the Irish central bank by the end of December, under an obscure program listed in the balance sheet as “other assets”. That is, the Central bank has electronically printed up new currency units for Irish commercial banks, without issuing debt behind these actions. The actions of the Irish central bank are not ignored by Germany, but fall out of the area of official monetary policy and appear to involve money creation outside the normal control of the European Central Bank.
Philipp Bagus, a young Spanish scholar and one of the prize winners of the IREF Essay Contest, recently published a very interesting book on the European monetary system. Using the…
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