Euro-Area Periphery Faces More Pain to Complete Rebalancing

Most peripheral euro-area countries have significantly improved their competitiveness recently, but more needs to be done. With currency devaluation ruled out, further downward pressure on labor costs is likely, which will probably deepen and prolong recessions and interfere with fiscal adjustment.

read more

Greece Still Needs a Long-Term Growth Plan

Even by the standards of the sovereign-debt crisis, the provisional agreement reached yesterday by euro-area finance ministers and the International Monetary Fund (IMF) on a second Greek rescue package looks like a messy fudge. It is clear that Greece’s euro-area partners are determined to avoid a near-term euro-area exit, but a long-term solution will require [...]

read more

ECB Bond Buying Is a Double-Edged Sword

European Central Bank (ECB) president Mario Draghi’s promise to do “whatever it takes to preserve the euro” and create a new bond-purchase program has been positive for market sentiment. But the program also carries real dangers if it breaks the fragile consensus on the board of the ECB and eases the pressure on governments to create a [...]

read more

Euro-Area Interest Rates: To Zero and Beyond?

There has been some speculation that the European Central Bank (ECB) may soon push its deposit rate into negative territory.

read more

Euro Area: Locked in a Cycle of Market Pressure and Policy Response

 The European Central Bank (ECB) has raised the prospect of a more effective bond-purchase programme. Unfortunately, it may require additional market pressure for governments to unlock that support.

read more

Draghi’s Dilemma: How to Meet
Heightened Expectations

European Central Bank Governor Mario Draghi has raised expectations ahead of this week’s ECB Governing Council meeting.

read more

Archives by Month:

Archives by Subject: