Collateral Easing with Disciplinary Dysfunction?

Policy Brief

24/06/2020

On the limitations of the ECBs COVID19 response

The COVID-19 crisis caused stress in European sovereign debt markets. The potential impact on euro resilience of rapidly increasing spreads on Italian government bonds gave rise to particular concern. The ECB’s response – ranging from the Pandemic Emergency Purchases Programme (PEPP) to several rounds of easing of its collateral policy – has been praised for quickly stabilizing government bond markets and ameliorating euro resilience concerns.

But it may not last.

As has often before been the case, the ECBs crisis response seeks to strike a balance between liquidity provision and risk control, but measures launched in the name of the latter threatens to undermine the former. From a financial stability perspective, it would be commendable if the ECB temporarily suspended key elements of its margining practices in credit operations, notably its practices of haircut differentiation and daily margin calls.

Read the FEPS Covid Response Paper

Find all related publications
Publications
22/11/2023

The macro-economic impact of the cost crisis

Lessons for Europe
18/09/2023

Making trade work for prosperity, people and planet

FEPS Primers series - Arancha González and Yanis Bourgeois
01/09/2023

Bidding farewell to workfare?

Recovery Watch series
09/06/2023

Governing the RRF

Recovery Watch series
Find all related Progressive Post
Progressive Post
21/09/2023

The EU economic governance reform: technical and political points

21/09/2023

Daring more democracy!

How democratisation can fix the EU's economic governance
21/09/2023

Clear head and nerves of steel – the dilemma of reforming our fiscal rules

Find all related events
Events
Upcoming
25/01/2024
Expert meeting (online)

Boosting Economic Democracy

The theory behind the practice
Past
07/12/2023
European Parliament (Hybrid)

A blueprint for a Social and Green Deal

Follow-up Event of the Beyond Growth Conference
06/11/2023
FEPS HQ

The future of work in Europe

Implications for equity and growth in Europe
Find all related news
News
29/11/2023

Economic Democracy

FEPS has launched an initiative on Economic Democracy
09/10/2023

Tax the rich

A European Citizens' Initiative
14/09/2023

Call for tender – Researcher on inflation

This call for tender closed on 03/10/23
20/02/2023

Let’s end involuntary unemployment!

European survey on the perception of unemployment and publicly funded jobs
Find all related in the media
In the media

“Trade doesn’t work in isolation from good domestic policies” Interview to Arancha González

by Borderlex 19/09/2023
Interview to Arancha González, former Spanish foreign minister, who released together with FEPS the new book entitled 'The Trade Handbook: Making Trade Work for Prosperity, People and Planet'

A szociális unió imperatívusza

by Új Egyenlőség 09/09/2023
'The imperative of Social Union'. Article about FEPS book 'Europe’s Social Integration: Welfare Models and Economic Transformations' by László Andor.

Após 66 anos de adiamentos, a barragem do Pisão entrou em contra-relógio

by Pùblico 19/08/2023
'After 66 years of postponements, the Pisão dam has entered a race against time' Pùblico's article mentions FEPS Policy Study 'Governing the RRF'

Ukrainian economy and society: whither the (postwar) country?

by Commons 16/06/2023
In Commons' article, Yuliya Yurchenko, co-author of FEPS’ book 'Europe and the war in Ukraine', outlines the consequences of the Russian invasion of Ukraine for the Ukrainian population and the plans needed for Ukraine's recovery.