Abstract
The year 2019 ushered in the end of an era for the European Central Bank when Mario Draghi stepped down as ECB President. The financial crisis left a legacy of central banks as “the only game in town”. The COVID-19 pandemic reinforced the role of central banks as critical firefighters during crises, in contrast to earlier periods. This contribution examines the evolution of central banking in Europe. First, it evaluates the ideational shifts that allowed for a more expansive interpretation of the role of a central bank. Second, it looks at the ECB’s response to the Covid-19 crisis and assesses the underlying reasons why the use of the bank’s balance sheet is here to stay. Third, it looks at these issues in a comparative perspective, contrasting the issues and policy responses faced by the ECB to those of the Bank of England and the US Federal Reserve. The final section concludes.
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Notes
- 1.
ECJ 16 June 2015, Case C-62/14, Gauweiler et al. v Deutscher Bundestag.
- 2.
ECJ 17 August 2017, Case C-493/17, REQUEST for a Preliminary Ruling under Article 267 TFEU from the Bundesverfassungsgericht (Federal Constitutional Court, Germany), Made by Decision of 18 July 2017, Received at the Court on 17 August 2017, in the Proceedings Brought by Heinrich Weiss and Others.
- 3.
BVerfG, Judgment of the Second Senate of 5 May 2020—2 BvR 859/15—paras. 1–237, http://www.bverfg.de/e/rs20200505_2bvr085915en.html.
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- 5.
There is no evidence which would indicate that asset purchases entail diminishing returns over time (Lane, 2020, February; Bernanke, 2020).
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- 7.
ECB, The Transmission Protection Instrument, 2022. https://www.ecb.europa.eu/press/pr/date/2022/html/ecb.pr220721~973e6e7273.en.html
- 8.
E.g. ECJ case C-62/14 (on OMT); ECJ case C-493/17 (on PSPP); German Federal Constitutional Court case BVerfG 2 BvR 859/15, 2 BvR 980/16, 2 BvR 2006/15, 2 BvR 1651/15.
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Chang, M., Glöckler, G., Pierret, L. (2023). Fighting Fires from Crisis to Crisis: The Evolution of Central Banking in Europe. In: Costa, O., Van Hecke, S. (eds) The EU Political System After the 2019 European Elections. Palgrave Studies in European Union Politics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-12338-2_15
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