The use of the Eurosystem’s monetary policy instruments and operational framework since 2009 Post author By Philip Lane Post date August 21, 2012 The ECB has released a new occasional paper on these topics – available here. Categories In Uncategorized 2 Comments on The use of the Eurosystem’s monetary policy instruments and operational framework since 2009 ← Call for Papers: Central Bank Conference “How to fix distressed property markets?” → Why a collapse of the Eurozone must be avoided 2 replies on “The use of the Eurosystem’s monetary policy instruments and operational framework since 2009” Reading the “non-technical” summary, one is reminded somewhat of the Wizard of Oz given the rather edulcorated version of events that it presents. For the ECB’s next magical trick, one has to refer to the inimitable Alphaville and Jacques Cailloux, now of Nomura. http://ftalphaville.ft.com/blog/2012/08/20/1124721/spiegel-buba-the-ecb-and-a-rather-predictable-back-and-forth/ Non Technical Summary would be better described as: Non Truthful Summary: “In simplified terms, several phases can be distinguished: a first pre-crisis phase, stretching until the end of July 2007, in which the banking system appeared sound and money markets functioned seamlessly; second, a phase of tensions in which bank balance sheets came under pressure due to uncertain valuations of sub-prime mortgages which led to tensions in the money market as counterparties grew concerned about increasing liquidity and credit risk; a third phase starting with the collapse of Lehman Brothers in September 2008, resulting in significant stress in the banking system and freezing the money market along name-specific lines; and, finally, a further phase began with the outbreak of the sovereign debt crisis in May 2010 which put banking systems in some euro area countries under enormous stress due to their exposure to sovereign debt.” How come I missed that last phase where ‘sovereign debt’ put ‘banking systems’ under enormous stress. With the exception of Greece, I thought it was the other way round. History is being rewritten. The facts don’t count. Comments are closed.