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The Single Monetary Policy and Its Decentralised Implementation: An assessment

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  • Gros, Daniel

Abstract

The statutes of the European Central Bank (ECB) stipulate that it should have recourse to national central banks (NCBs) to carry out monetary policy operations. Such a structure would not be a problem if these operations were all identical across member states and if the resulting profits and losses were shared. But this is not the case today. In this sense, the euro area no longer has a ‘single’ monetary policy. There is little one can do about this situation, except to wait until the government purchase programme ends and is then reversed. However, two steps could be undertaken already now: i) the granting of emergency liquidity assistance should be shifted to the ECB, and ii) the NCBs should be forbidden to undertake any financial operation that is not a direct consequence of their execution of the ECB’s monetary policy decisions. The existing stocks of assets (and liabilities), the so-called ANFA (Agreement on Net Financial Assets) holdings, which are not related to monetary policy, should be transferred to either national finance ministries or national special purpose vehicles.

Suggested Citation

  • Gros, Daniel, 2017. "The Single Monetary Policy and Its Decentralised Implementation: An assessment," CEPS Papers 13047, Centre for European Policy Studies.
    • Handle: RePEc:eps:cepswp:13047
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    File URL: https://www.ceps.eu/system/files/PI2017-36DG_SingleMonetaryPolicy.pdf
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    1. Lorenzo Bini Smaghi & Daniel Gros, 2000. "Open Issues in European Central Banking," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-333-98188-7, March.
    2. Moutot, Philippe & Jung, Alexander & Mongelli, Francesco Paolo, 2008. "The working of the eurosystem: monetary policy preparations and decision-making - selected issues," Occasional Paper Series 79, European Central Bank.
    3. of England, Bank, 2016. "Markets and operations," Bank of England Quarterly Bulletin, Bank of England, vol. 56(4), pages 212-221.
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    Cited by:

    1. Gros, Daniel, 2017. "Target imbalances at record levels: Should we worry?," CEPS Papers 13209, Centre for European Policy Studies.

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