Abstract
As the basic institutional body of the monetary union, with its duty being the preservation of price stability, the European Central Bank (ECB) proved weak in quickly and effectively confronting the crisis. The tools at its disposal did not provide for such an eventuality. Hence, precious time was lost during the first stages of the crisis onset. In its attempt to confront the crisis and prevent its spread, the ECB took a series of unconventional policy measures. This resulted in serious concerns being raised regarding the competencies of the ECB and to what extent, if any, they deviated from the Maastricht Treaty. The cash injections for rescuing the banking system and the purchase of government bonds from the secondary market did not appear to have the expected results. The ECB’s intervention as a Lender of Last Resort (LOLR) triggered intense disagreements, not only as to the effectiveness of the effort, but also as to the possible side effects such a move would have on the fiscal discipline of countries in the future.
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Petrakis, P.E., Kostis, P.C., Valsamis, D.G. (2013). The Policy of the European Central Bank. In: European Economics and Politics in the Midst of the Crisis. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-41344-5_12
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DOI: https://doi.org/10.1007/978-3-642-41344-5_12
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