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The True Size of the ECB: New Insights from National Central Bank Balance Sheets

Stephen Wright () and Charmaine Portelli
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Charmaine Portelli: University of Malta

No 1807, Birkbeck Working Papers in Economics and Finance from Birkbeck, Department of Economics, Mathematics & Statistics

Abstract: The balance sheet of the European Central Bank (ECB) represents a very small fraction (onetenth) of the reported balance sheet of the Euro Area system as a whole. This paper presents evidence that the effective size of the ECB’s balance sheet is massively higher than this, and indeed is significantly higher even than the reported balance sheet of the Eurosystem as a whole. We point to strong evidence that most NCBs (especially those of the larger countries) effectively act on autopilot, as branches of a near-monolithic institution which we term the “Mega-ECB”. The lending behaviour of the “Mega-ECB” appears to have been driven primarily by the borrowing needs of the distressed countries of the EU’s southern periphery.

Keywords: central bank balance sheet; capital key; ECB; Eurosystem; national central canks; Target2. (search for similar items in EconPapers)
JEL-codes: E52 E58 F36 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-cba, nep-eec, nep-mac and nep-mon
Date: 2018-05
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http://www.bbk.ac.uk/ems/research/wp/2018/PDFs/BWPEF1807.pdf First version, 2018 (application/pdf)

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