Institutional Constraints and Liquidity Provision in the Eurozone Core and Periphery Before and After Crises: A Preliminary Comparison of the Eurozone Crisis and the Coronavirus Pandemic

This paper presents a preliminary comparison of the Eurosystem response to the Global Financial Crisis and Eurozone Crises with the onset of the Coronavirus Pandemic in 2020. It analyzes bank, national central bank (NCB), and government balance sheets to show the effect of ECB decisions to consrain...

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Bibliographic Details
Published in:PSL quarterly review 2022-12, Vol.75 (303)
Main Author: Eichacker, Nina
Format: Article
Language:English
Subjects:
Balance sheets
Center and periphery
Central banks
Collateral
Coronaviruses
Councils
COVID-19
Economic crisis
Endogenous
Eurozone
International finance
Keynesian theory
Liquidity
Monetary policy
Money
Pandemics
Perceptions
Post-Keynesianism
Repurchase agreements
Reserve assets
Sovereign debt
Structuralism
Time use
Volatility
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Summary:This paper presents a preliminary comparison of the Eurosystem response to the Global Financial Crisis and Eurozone Crises with the onset of the Coronavirus Pandemic in 2020. It analyzes bank, national central bank (NCB), and government balance sheets to show the effect of ECB decisions to consrain or enable liquidity provision across the Eurozone, particularly along core and peripheral lines. It argues that these dynamics reflect Post-Keynesian theories of endogenous money, and the potential for monetary authorities to structurally influence liquidity preference and provision. As Eurozone governments debate whether to continue these practices, systemic liquidity crises that hurt financial and fiscal activity remain a risk at the time of writing.
ISSN:2037-3635
2037-3643
DOI:10.13133/2037-3643/17730