Financial stability and the ECB
Jerome Creel (),
Paul Hubert (),
Fabien Labondance () and
Xavier Ragot ()
Additional contact information
Christophe Blot: Observatoire français des conjonctures économiques
Sciences Po publications from Sciences Po
For nearly two decades, the policy debate has focused on the attitude of central banks regarding financial stability and asset price bubbles. This debate is resurfacing with the recent episodes of expansionary monetary policies implemented through unconventional measures. The aim of this policy brief is to feed reflections on the risks for financial stability associated with the extension of quantitative easing (QE) by the ECB. We first recall that the theoretical and empirical literature does not provide a clear consensus on the influence of monetary policy on asset price bubbles. Then, we propose indicators of asset price bubbles for the euro area and we discuss the effect of monetary policy on these indicators. So far, there is no evidence of presence of asset price bubbles in the euro area. Besides, the change in the ECB balance sheet would not trigger bubbles in the stock and housing markets. However, it may be a concern for the bond market. From this, we argue that a gradual decline in ECB’s balance sheet would be important to limit the risk of a new banking crisis in the euro area.
Keywords: financial stability; price bubbles (search for similar items in EconPapers)
JEL-codes: E5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-mon and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://spire.sciencespo.fr/hdl:/2441/35ph3mv7tn80 ... b2017-ofce-final.pdf (application/pdf)
Working Paper: Financial stability and the ECB (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spo:wpmain:info:hdl:2441/35ph3mv7tn80ur0ii4gg6m5tir
Access Statistics for this paper
More papers in Sciences Po publications from Sciences Po Contact information at EDIRC.
Bibliographic data for series maintained by Spire @ Sciences Po Library ().