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Liquidity in times of crisis: Even the ESM needs it

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  • Gros, Daniel
  • Mayer, Thomas

Abstract

Europe’s policy-makers are engaged in protracted discussion on whether and how to increase the size of the euro rescue funds (the EFSF and the ESM). In this Policy Brief, Daniel Gros and Thomas Mayer argue that this attention on the headline size of the EMS and EFSF is misplaced. They propose that a simpler solution would be to register the ESM as a bank, with access to the ECB under the same conditions as apply to any normal bank. This would provide a liquidity backstop for the EMS which could refinance any secondary market interventions at the ECB. The size of the guarantees given to the ESM would then become secondary.

Suggested Citation

  • Gros, Daniel & Mayer, Thomas, 2012. "Liquidity in times of crisis: Even the ESM needs it," CEPS Papers 6787, Centre for European Policy Studies.
    • Handle: RePEc:eps:cepswp:6787
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    File URL: http://www.ceps.eu/system/files/book/2012/03/PB265%20DG%20%2526%20TM%20Liquidity%20in%20times%20of%20crisis.pdf
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    Cited by:

    1. Alexandra M. D. Hild & Bernhard Herz & Christian Bauer, 2016. "The European Stability Mechanism - bastion of calm or crisis accelerant?," Research Papers in Economics 2016-12, University of Trier, Department of Economics.
    2. Ivo Arnold, 2021. "An Interest Stabilisation Mechanism to Unburden the ECB," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 56(5), pages 274-277, September.
    3. McQuinn, Kieran & Varthalitis, Petros, 2020. "Debt sharing after Covid-19: How the direct involvement of EU institutions could impact the recovery path of a member state," Papers WP663, Economic and Social Research Institute (ESRI).
    4. Herz, Bernhard & Bauer, Christian & Hild, Alexandra, 2016. "Designing the ESM—Who Profits, Who Pays?," VfS Annual Conference 2016 (Augsburg): Demographic Change 145709, Verein für Socialpolitik / German Economic Association.
    5. Gros Daniel, 2018. "An Evolutionary Path Towards a European Monetary Fund," The Economists' Voice, De Gruyter, vol. 15(1), pages 1-15, December.

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