Extraordinary times call for extraordinary measures. The European Central Bank introduced a range of measures to stabilise the region’s economy when the worst financial crisis for decades began in 2008. Quantitative easing (QE) was seen as one way to help boost liquidity in the banking system – but did it have the desired effect?
Research by our faculty shows that QE may affect asset prices and possibly lead to risks in the Eurozone. Their studies also suggest ways in which the European Central Bank can strengthen economies and markets in turbulent times.
Organising European funding so that governments with limited capital can protect the region’s economies is one solution. Another is to introduce a sovereign debt restructuring mechanism to help insolvent countries within the EU. This measure would not only reduce debt in the Eurozone, but also give European nations the financial stability to deal with future crises.
Leading voices in the Eurozone debate discuss the measures Eurozone countries need to put in place to guard against returning financial instability that could threaten a sustainable recovery. This report is the first in a series of Monitoring the Eurozone reports from the Centre for Economic Policy Research, which will define the biggest economic challenges the continent will face in the coming years as it tries to prevent a recurrence of the 2008 global crisis. LBS Professors of Economics Lucrezia Reichlin and Hélène Rey are among the authors of this report.
LBS faculty in the news
- Deutsche Bank, facing criticism, surveys limited options - 27 July 2016
- What the ECB's Sintra Policy Forum focused on instead of Brexit - 28 June 2016
- Making the Eurozone more resilient: What is needed now and what can wait - 25 June 2016
- Reinforcing the Eurozone and protecting an open society - 27 May 2016
- Reinforcing the Eurozone and protecting an open society: Refugee bonds - 27 May 2016
- Removing the overhang - 10 May 2016
- The Eurozone crawls towards dealing with its legacy debts - 10 May 2016
- Is this the grand bargain to rid Europe of its debt scourge? - 4 May 2016
- Three steps to global financial stability - 22 January 2016