Eurozone
Book notes: And the weak suffer what they must?, by Yanis Varoufakis
A book that is likely to elicit strong opinions – but Varoufakis writes persuasively, and may well win over many of his readers, says David Mayes
ECB paper finds ‘sizeable’ impact from QE
Authors find empirical evidence of various channels through which asset purchases affect the eurozone economy, before testing them in a general equilibrium model
ECB delays decision on policy redesign
Mario Draghi says committees will investigate “smooth implementation” of asset purchases, but offers no new policies today; highlights signs of greater willingness for government action
‘Iconic’ Irish central bank property put on market
No asking price for Dame Street site – sale is by best bid; more than 1,500 central bank staff to move to new site in North Wall Quay
Signs of ‘de-anchoring’ inflation expectations in eurozone – ECB paper
Study finds professional forecasts are paying more attention to ECB inflation projections and less to the target; authors suggest “extensive use of forward guidance” could help
Book notes: The euro and the battle of ideas, by Markus K Brunnermeier, Harold James and Jean-Pierre Landau
The authors have produced a fascinating and informative book that offers suggestions on how differences in beliefs can be overcome
IMF’s crisis performance criticised by internal review
Report evaluates IMF’s handling of eurozone crises from 2010 to 2013; work during programme design and implementation described as ‘uneven’ and concerns raised over political pressure
Model-based regulation in Germany had unintended consequences, researchers say
The move to model-based banking regulation in Germany studied in working paper; loan default and loss rates rose for loans created under new regime
Policy-makers should base analysis on broad set of monetary aggregates, paper argues
Analysis of the stability of demand for components of monetary aggregates in the eurozone argues against reliance on a single measure, researcher says
Draghi: Central bankers must align policies
ECB president calls for greater alignment and better communication of economic policy across national borders; calls for globally co-ordinated fiscal expansion on lines of 2008-09
Irish paper proposes three-phase model of volatility in bond markets
Irish paper finds ‘good’, ‘bad’ and ‘ugly’ phases in eurozone sovereign debt markets from 2003 to 2014; crisis not caused by changes to the shock mechanism, but by pre-existing cross-country links
SSM challenges eurozone banks to improve governance
Supervisor warns most significant banks in eurozone fall short of international best practices; presents lessons from assessment of management bodies and risk appetite frameworks
Malta’s deputy governor denies corruption allegations
Deputy governor of Malta’s central bank strongly denies allegations of bribe-taking and issues defamation writs; no official announcement on next governor, due to be appointed on July 1
Helicopter money still contentious as Borio enters debate
Article by Claudio Borio and others claims helicopter money means giving up on monetary policy for ever, but economists such as Adair Turner and John Muellbauer question the result
Greek deal unlocks funds but delays debt relief
Deal allows possibility of future debt relief but drops IMF’s stronger demands; pushes most difficult decisions back
ECB looks to add eight more O&Ds to guide
European Central Bank proposes guidance on the application of another eight options and discretions in banking supervision; public consultation will run until June 21
Paper examines credit risk spillover in the eurozone
Estimations of fair-value credit default swap values may give better picture of eurozone risk contagion than market prices for credit default swaps, ECB paper argues
Panellists at ECB conference challenge complexity of macro-prudential set-up
Public and private sector representatives agree it is too early to judge macro-prudential framework; identify some positive elements but raise concerns about institutional complexity
ECB paper explores public and private employment link
Research contradicts literature that claims an increase in public employment crowds out private employment, at least in recessions
Mersch sets out broad questions around distributed ledgers
Yves Mersch considers how access to central bank money could work if market infrastructure adopts the technology; ECB publishes paper on its application in post-trade market for securities
Perceived long-term eurozone deflation risk unaffected by oil – paper
Between 2010 and 2012, perceived short-term deflation risk was “significantly” affected by oil prices, while medium-term risk was only affected between 2013 and 2015, research suggests
Europe set for new Greek clash as Lagarde hits back over leaks
IMF chief has sharp words for the Greek prime minister after staff phone conversation is posted online by Wikileaks; debt relief remains a major sticking point as July repayment looms
Tax system severely reduces Italian banks’ profits – paper
Disparities in eurozone countries’ effective tax rates for their banking sectors may threaten banks’ ability to strengthen their capital, a Bank of Italy paper argues
Weidmann says latest ECB package went ‘too far’
Bundesbank president says the council was agreed on the need to act in the wake of weaker economic projections, but the eventual measures, including an expansion of QE, were too much