Ralph Atkins How the ECB saved the eurozone (last time)

February 13, 2012 6:33 pm by Ralph Atkins

Just how big a difference did European Central Bank action make after the collapse of Lehman Brothers in 2008?

ECB researchers have come up with some new, flattering numbers on the economic impact of the ECB’s decision to offer unlimited liquidity to eurozone banks. That step – taken under Jean-Claude Trichet, then ECB president – foreshadowed the decision in December by Mario Draghi, his successor, to extend the maximum loan term from one to three years.

The authors’ key conclusion, in a discussion paper from the London-based Centre for Economic Policy Research,  is that eurozone industrial production two years after Lehman Brothers was 2 per cent higher than would otherwise have been the case and unemployment about 0.6 per cent lower. 

Continue reading: “How the ECB saved the eurozone (last time)”

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Posted in European Central Bank |

Ralph Atkins ECB interest rates, Greece and collateral damage

February 8, 2012 2:50 pm by Ralph Atkins

The European Central Bank’s governing council has a lot to discuss at Thursday’s meeting. Interest rates may not attract the most attention: the ECB’s main rate is widely expected to remain at 1 per cent.

Since January’s council meeting, the “tentative signs of stabilisation in activity at low levels” spotted by Mario Draghi, president, have been confirmed in economic indicators, especially eurozone purchasing managers’ indices. The latest bank lending data and survey of credit standards were very weak – but perhaps no weaker than expected. Crucially, it was too early for the impact of the €489bn of three year loans injected into the eurozone financial system by the ECB in December to have been felt.

Moreover, there seems little reason for the ECB to adjust interest rates ahead of a second three year longer-term refinancing operation (Ltro) on February 29. Instead, attention at Mr Draghi’s press conference is likely to focus on two issues: Greece, and the latest relaxation of ECB collateral rules. 

Continue reading: “ECB interest rates, Greece and collateral damage”

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Posted in European Central Bank |

Ralph Atkins The ECB: it’s a man’s world

January 31, 2012 5:38 pm by Ralph Atkins

The European Central Bank gets criticised for many things these days. On one issue it can offer little by way of defence: the complete lack of women in its top ranks. Gender balance has been “blatantly disregarded” at the euro’s monetary guardian, according to Sharon Bowles, chairwoman of the European Parliament’s economic and monetary affairs committee. She has a point: not one member of the ECB’s six-strong executive board or 23-strong governing council is female.

One possible (sort of) excuse is that female central bankers are a rarity globally. Barely more than 6 per cent of governors globally are women, according to the central bank directory.

But the ECB has a chance to make amends. Ms Bowles’s outburst came as the parliament prepares to review candidates for a forthcoming vacancy on its executive board. ”One has to ask why important and influential EU bodies such as the ECB systemically fail to select female candidates. The argument that there are no qualified women for these positions cannot be taken seriously,” she said in a statement.

Any chance of a woman getting the job? Scarcely. As I have noted in previous Money Supply posts, Spain, Luxembourg and Slovenia are pushing their own candidates for the vacancy. All three are male. What will be decisive is whether Spain wins the argument that, as one of the eurozone’s four largest economies, it has a right to a place on the board. As far as I know, the ECB’s gender balance is not an issue.

Posted in Uncategorized |

Ralph Atkins Draghi’s bond buying record

January 30, 2012 4:16 pm by Ralph Atkins

One of Mario Draghi’s first acts after becoming European Central Bank president on November 1 was to make clear the limitations of the ECB’s government-bond-buying programme. It would be temporary, limited and aimed purely at restoring the functioning of markets, he said at his first press conference. The ECB would not act as “lender of last resort” to governments, he said – helping reassure sceptical Germans. The impression he gave was that the ECB had serious misgivings about setting the wrong incentives for governments and would wind down the programme as soon as possible.

So how is he doing?

Continue reading: “Draghi’s bond buying record”

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Posted in European Central Bank, Uncategorized |

Ralph Atkins ECB agonises over Greek losses

January 26, 2012 2:40 pm by Ralph Atkins

The European Central Bank is maintaining its silence over its Greek bond holdings, but the debates continue behind closed doors. On one point its governing council appears more-or-less united: the ECB cannot voluntarily accept losses on its holdings, on which it spent an estimated €35bn to €40bn. To do so would breach the European Union ban on monetary financing – central bank funding of governments. Germany’s Bundesbank has said as much publicly.

More interesting is what the ECB would do if the Greek government sought to impose losses.

Continue reading: “ECB agonises over Greek losses”

Posted in European Central Bank |

Ralph Atkins ECB’s Praet plays the Draghi game

January 25, 2012 4:07 pm by Ralph Atkins
Peter Praet. Image by Getty.

Peter Praet. Image by Getty.

Peter Praet, the European Central Bank executive board member who took over responsibility for its economics department earlier this month, chose – probably wisely – a German newspaper for his debut interview.

Talking to the Frankfurter Allgemeine Zeitung, the German-born Belgian sounds tough – but does not actually explicitly rule out much in terms of possible policy actions. To that extent he looks entirely in step with Mario Draghi, the ECB president.

Continue reading: “ECB’s Praet plays the Draghi game”

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Posted in European Central Bank, Uncategorized |

Ralph Atkins Weder di Mauro tipped for SNB

January 25, 2012 3:13 pm by Ralph Atkins

Beatrice Weder di Mauro, member of Germany’s council of economic experts, has emerged as a possible candidate to join the board of the Swiss National Bank, following the resignation of Philipp Hildebrand .

In Davos, Switzerland, today, she refused to comment on rumours about her future, reports Bloomberg.

Continue reading: “Weder di Mauro tipped for SNB”

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Posted in European Central Bank, Swiss National Bank |

Ralph Atkins Finland fuels dispute over ECB seat

January 23, 2012 3:47 pm by Ralph Atkins

And now Finland. Jyrki Katainen, the country’s prime minister, has joined calls for a northern European to be appointed to an upcoming vacancy on the European Central Bank’s six-man executive board.

As reported by the Financial Times, a north-south divide has opened up over the successor to Spain’s José Manuel González-Páramo, whose eight-year term expires at the end of May. Madrid has nominated another Spaniard as his replacement. But Luxembourg and Slovenia have put forward their own candidates, and the Netherlands has also expressed worries about the disproportionate number of southern Europeans on the board.

Continue reading: “Finland fuels dispute over ECB seat”

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Posted in European Central Bank |

Ralph Atkins The ECB and its Greek bonds

January 23, 2012 2:56 pm by Ralph Atkins

As Greece’s largest bond holder, with a portfolio worth perhaps €40bn, the European Central Bank is watching closely the tense and protracted negotiations over losses private investors would accept voluntarily as part of a second refinancing deal for the country. Mario Draghi, ECB president, will discuss progress when eurozone finance ministers gather tonight (Monday) in Brussels.

The ECB has two objectives: first, to secure a deal that has a reasonable chance of working and, second, to avoid bearing any burden itself. Neither will be easy.

Continue reading: “The ECB and its Greek bonds”

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Posted in European Central Bank |

Ralph Atkins Luxembourg challenges Spain over ECB seat

January 20, 2012 12:30 pm by Ralph Atkins

The battle hots up. Luxembourg has challenged Spain’s self-proclaimed right to a place in the European Central Bank’s top management team. The Grand Duchy on Friday announced it would nominate Yves Mersch, the country’s central bank governor, for the upcoming vacancy on the ECB’s six-man executive board.

As Money Supply reported earlier this week, Madrid has already nominated Antonio Sáinz de Vicuña, a Spanish ECB veteran who heads its legal department, to replace José Manuel González-Páramo, his compatriot , whose eight-year term on the executive board ends in May.

The contest may prove an unwelcome distraction as eurozone leaders seek to combat the region’s debt crisis. But this could be a battle fought at the highest level.

Continue reading: “Luxembourg challenges Spain over ECB seat”

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Posted in European Central Bank |
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Chris Giles Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS

Ralph Atkins, Frankfurt bureau chief, has been writing about European economics and politics for the Financial Times for more than 20 years following an economics degree from Cambridge. He has been watching the European Central Bank and eurozone economies since 2004. He has previously worked in London, Bonn, Berlin, Jerusalem and Brussels. RSS

Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS

Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS

James Politi is US economics and trade correspondent for the Financial Times, based in Washington DC. He joined the Washington bureau in January 2008 following four and a half years as US deals correspondent covering M&A and private equity. James Politi joined the FT in London in 2000 with an MSc at the London School of Economics, and undergraduate degrees from Georgetown University and the University of Florence. RSS

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