The ECB’s Contemporary Unconventional Monetary Policy in the Context of the Financial Crisis

The main objective of the paper is to explore the unconventional (non-standard) measures of the European Central Bank’s monetary policy, undertaken in response to the global financial crisis. This research puts emphasis on the key instruments of the ECB’s unconventional mon­etary policy, such as follows: first, conduct of accommodative monetary policy at nominal in­terest rates, close to zero or even below zero; second, implementation of measures of en­hanced credit support policy for commercial banks through the Åxpanded Asset Purchase Programme (APP). The latter presently includes the following programmes: Asset-backed secu­rities purchase programme (ÀBSPP), Covered bond purchase programme (ÑBPP), Corpo­rate Sector Purchase Programme (CSPP) and Òargeted longer-term refinancing operations programme (TLTRO II). With this regard, in the paper is also investigated the ECB’s practice on expanding credit assessment framework for eligible assets used for the Eurosystem credit operations. Moreover, the limitations against the measures for provision of liquidity to financial markets and banking system in the euro area are explored. Special attention in the paper is attached on the ECB’s monetary policy started in June 2014, which has gone beyond the zero bound on nominal interest rates, in particular the interest rate on deposit facility, as well as the effects stemming from the negative interest rate levels on lending and real economy in the euro area. This analysis is associated with the study on banking lending in the euro area as a result from the ECB’s expanded asset purchase programme and the negative deposit facility rate – in particular, the credit standards on loans to enterprises and households, banks’ net interest income, their liquidity ratio and credit margins.