Open Issues in European Central Banking

Cover......Page 1
Contents......Page 4
Foreword......Page 8
Introduction......Page 10
Introduction......Page 14
What the treaty states (and what it doesn\'t state)......Page 15
The balance of power......Page 18
The risks of a weak ECB......Page 20
The interpretation of the treaty......Page 26
The underlying reasons for decentralization......Page 29
The consequences of decentralization......Page 32
1.3 Is (de)centralization sustainable?......Page 34
Introduction......Page 38
The instruments......Page 39
Financial regulation in the EU......Page 40
Prudential supervision......Page 44
Solvency and liquidity crises......Page 49
Bailing out banks in monetary union......Page 50
The lender-of-last-resort in monetary union......Page 54
Who (in the Eurosystem) should lend in the last resort?......Page 58
2.3 Should the Eurosystem be granted supervisory powers?......Page 60
Conclusions......Page 64
Annex 2.1 Does prudential supervision interfere with monetary policy?......Page 67
Introduction......Page 76
3.1 The Eurosystem and its components......Page 77
Liabilities and size: A comparison with the US and Japan......Page 79
The composition of the asset side: Foreign exchange assets......Page 82
Balance sheet size: Does it matter?......Page 85
A lean balance sheet......Page 89
Excess foreign exchange reserves?......Page 91
Conclusions......Page 93
Annex 3.1 An example of simplicity: The allocation of assets and returns in the Federal Reserve System......Page 95
Annex 3.2 Estimating the revaluation reserves using a VaR approach......Page 97
Introduction......Page 103
4.1 What is seigniorage?......Page 104
4.2 The treaty\'s provisions......Page 105
4.3 The problems......Page 107
4.4 The agreed non-solution......Page 112
4.5 Alternative approaches to phasing-in......Page 114
Annex 4.1 Legal Issues......Page 120
Annex 4.2 The distribution of seigniorage in the context of the fiscal constitution of the EU......Page 121
Conclusions......Page 117
Introduction......Page 127
Statutory independence......Page 129
Functional independence......Page 131
Economic independence......Page 132
Personal independence......Page 133
5.2 Measuring the ECB\'s independence against that of other central banks......Page 134
5.3 The limits of measurement......Page 138
The exchange rate regime......Page 141
NCBs\' activities \'outside\' the ESCB......Page 145
Conclusion......Page 147
6.1 Democratic control, independence and accountability......Page 153
6.2 The economics of central bank accountability......Page 156
6.3 How to assess central bank accountability?......Page 160
6.4 How accountable is the ECB?......Page 166
Conclusions......Page 175
7.1 Transform the Eurosystem into a true European Central Bank......Page 180
7.2 Clarify who is responsible for financial stability......Page 181
7.3 Clarify financial relationships within the Eurosystem......Page 183
I. Chapters 2 and 3 of Title VI on Economic and Monetary Policy of the Treaty on European Union......Page 186
II. Protocol (No. 3) on the Statute of the European System of Central Banks and of the European Central Bank......Page 195
Index......Page 214
Names Index......Page 217