Central Banking in Europe Today: Over-Mighty or Under-Powered?
RECORDING OF THE EVENT
16:30 | Introduction by Vincenzo Grassi, EUI Secretary General and Brigid Laffan, RSCAS EUI
16:50 | Introduction by Andrea Simoncini, UNIFI and Fondazione CR Firenze
17:00 | Lecture by Patrick Honohan “Central Banking in Europe today: Over-mighty or Under-powered”
17:45 | Q&A, moderated by Giorgia Giovannetti, UNIFI and EUI
18:30 | Reception for all participants
The ECB and other European Central Banks have never looked so powerful. They have driven interest rates below zero and purchased trillions of euros of government and other bonds. They have become more active in bank supervision – a function now also centralised for the euro zone in the ECB. Moreover, a much broader toolkit than used in past decades is being energetically employed. Having tested the limits of their mandates, the ECB and other European Central Banks are now unlikely to return to the light touch policy of the 1990s. However, some puzzles remain:
- Why is inflation in the euro area – the main statutory objective of the ECB – still below target?
- Why were these tools not employed earlier in the crisis?
- Is there more that could be done now, such as “helicopter money”; and if so, should it be used?
This lecture will explain how the crisis has gradually drawn the ECB into policy areas and instruments for which its mandate is less explicit, though no less real. The Frankfurt-based Bank has, in the past ten years, changed more than most central banks. Like other major central banks, it has had to innovate in response to developments in globalization, in commodity price fluctuations and in unusually large fiscal deviations. But in doing so the ECB has been faced with unique challenges of political legitimacy as well as of economic analysis in the multi-country currency union.
Honorary Professor of Economics at Trinity College Dublin; Nonresident Senior Fellow at the Peterson Institute for International Economics
Former Governor of the Central Bank of Ireland
Patrick Honohan was Governor of the Central Bank of Ireland and a member of the Governing Council of the European Central Bank from September 2009 to November 2015. He is an honorary professor of economics at Trinity College Dublin and a nonresident senior fellow at the Peterson Institute for International Economics, Washington, DC. Previously he spent twelve years on the staff of the World Bank where he was a Senior Advisor on financial sector issues. During the 1990s he was a Research Professor at Ireland’s Economic and Social Research Institute. In the 1980s he was Economic Advisor to the Taoiseach (Irish Prime Minister) Garret FitzGerald. He also spent earlier spells at the Central Bank of Ireland and at the International Monetary Fund. A graduate of University College Dublin, he received his PhD in Economics from the London School of Economics in 1978. He has taught economics at the London School of Economics, at University College Dublin and as a visitor to the University of California San Diego and the Australian National University as well as at Trinity College Dublin. He was elected a member of the Royal Irish Academy in 2002.