JKH On Paul De Grauwe’s Fiscal Arithmetic

21 January 2015

In a recent article for VOX, Paul De Grauwe and Yuemei Ji write about potential fiscal effects of a possible asset purchase program by the Eurosystem (European Central Bank and the National Central Banks in the Euro Area). In that the authors take an extreme stand suggesting that a default by a Euro Area government […]


Mario Draghi – Euro Saviour?

26 January 2013

Recently Mario Draghi, the European Central Bank President, has been going around telling everyone that “fiscal consolidation” is the absolutely essential to resolve the Euro Area crisis, given some positive developments. Although, this view of his is known and this has had a big influence on policy, he has become more and more vocal about […]


OMT! Enter The Draghi

6 September 2012

As leaked earlier by Bloomberg, Mario Draghi in a press conference today, presented his big plan to save the world. This will involve OMTs (Outright Monetary Transactions) – in which a Euro Area nation central government requesting aid from the EFSF/ESM will also be provided help by the ECB. Under this plan, when a nation’s […]


The Eurosystem And Greek Government Debt

25 January 2012

Some bonds of the Greek government mature on March 20. The total principal amount is €14.5bn. The focus in the financial markets is what will happen to these securities and everyday we read about negotiations with the creditors on “private sector involvement (PSI)”. For the latest see this WSJ article Greece Private-Sector Creditors Meet in Paris. According […]


The Eurosystem: Part 5

11 December 2011

This is the fifth part of the series of posts on the description of the Eurosystem. In this post, I will discuss whatever I had kept postponing in previous posts – except central bank swaps, which I will postpone to Part 6. [Links for previous parts: Part 1, Part 2, Part 3, Part 4] The […]



8 December 2011

Mario Draghi is talking to press reporters now, as I write. The ECB reduced reserve requirements to 1% from 2% and plans to do Long-term Refinancing Operations with maturity up to 3 years (i.e., it will lend banks for a term of three years). It also relaxed collateral standards. The markets are in absolute roller […]