Deutscher Journalistenpreis

Willem Buiter: I vote for no change in any of the 3 policy rates, and in favour of ending asset purchases as soon as possible. Not to surprise markets too much, I recommend stopping in September 2017.

The ECB has to stop pretending that it has effective tools for stimulating economic activity and getting inflation closer to the target. Cutting rates further, without eliminating the ELB, would do more harm than good. Asset purchases are backdoor mutualization of high-risk sovereign debt (mainly Italy) under the guise of monetary policy dedicated to the pursuit of the inflation target. The own-risk feature of 82% of the PSPP will either be ignored when the Italian sovereign defaults or, if enforced, will push Italy out of the monetary union. The only useful balance sheet expansion of the Eurosystem would be through the monetization of a sizeable fiscal stimulus, mainly focused on countries with large output gaps (intelligently designed helicopter money).

The ECB should be advocating (in private and in public) the creation of an orderly sovereign debt restructuring mechanism (SDRM), attached to a conditional lending-to-sovereigns facility like the ESM, but an order of magnitude larger.

The Eurosystem should stop being a system of currency boards and become an operationally decentralized central bank, with a single profit-and-loss center. All‘own risk’ activities should either be kicked off the balance sheet (including ANFA) or be turned into shared risk activities.

Recapitalizing insolvent and systemically unimportant Italian banks through the precautionary recapitalization facility has to end. BRRD-compatible bail-ins should take their place. Limits on the exposure of banks to any sovereign, including their own, should be imposed (at a level no higher than the maximum exposure to private counterparties). Risk-weighting of sovereigns has to be imposed.

There is a chance that the EMU can be saved, but if the current charade continues, this chance will vanish soon.
>> Kontakt




	31.05.2017 I vote for no change in any of the 3 policy rates, and in favour of ending asset purchases as soon as possible >> GROUP: Shadow ECB Council / EZB-Schattenrat Willem Buiter Tweet Teilen Willem Buiter: I vote for no change in any of the 3 policy rates, and in favour of ending asset purchases as soon as possible. Not to surprise markets too much, I recommend stopping in September 2017. The ECB has to stop pretending that it has effective tools for stimulating economic activity and getting inflation closer to the target. Cutting rates further, without eliminating the ELB, would do more harm than good. Asset purchases are backdoor mutualization of high-risk sovereign debt (mainly Italy) under the guise of monetary policy dedicated to the pursuit of the inflation target. The own-risk feature of 82% of the PSPP will either be ignored when the Italian sovereign defaults or, if enforced, will push Italy out of the monetary union. The only useful balance sheet expansion of the Eurosystem would be through the monetization of a sizeable fiscal stimulus, mainly focused on countries with large output gaps (intelligently designed helicopter money). The ECB should be advocating (in private and in public) the creation of an orderly sovereign debt restructuring mechanism (SDRM), attached to a conditional lending-to-sovereigns facility like the ESM, but an order of magnitude larger. The Eurosystem should stop being a system of currency boards and become an operationally decentralized central bank, with a single profit-and-loss center. All‘own risk’ activities should either be kicked off the balance sheet (including ANFA) or be turned into shared risk activities. Recapitalizing insolvent and systemically unimportant Italian banks through the precautionary recapitalization facility has to end. BRRD-compatible bail-ins should take their place. Limits on the exposure of banks to any sovereign, including their own, should be imposed (at a level no higher than the maximum exposure to private counterparties). Risk-weighting of sovereigns has to be imposed. There is a chance that the EMU can be saved, but if the current charade continues, this chance will vanish soon. >> Kontakt Zum aktuellen Club-Impuls		Benutzername Passwort >> Ich bin kein Mitglied und bitte um einen Testzugang
			Deutscher Journalistenpreis Kennedyallee 93 60596 Frankfurt/Main Kurator: Volker Northoff Telefon +49 (0)69 40 89 80-00 Telefax +49 (0)69 40 89 80-10 info@djp.de Impressum Datenschutzerklärung